Pakistan's parliament has given its approval to the government's revised budget for the fiscal year 2023-24 in order to meet the conditions set by the International Monetary Fund (IMF) and

secure the release of additional bailout funds. The IMF had expressed dissatisfaction with the initial budget, stating that it missed the opportunity to expand the tax base in a more progressive manner.

Finance Minister Ishaq Dar introduced new taxes and expenditure cuts, which were included in the revised budget approved by the parliament. The approval comes as Pakistan faces a severe balance of payment crisis, with currency reserves that can barely cover one month's worth of imports. Analysts warn that without the IMF funds, the country could be at risk of a debt default.

The deadline for the $6.5 billion Extended Fund Facility (EFF) agreed upon in 2019 is June 30, and there are only five days remaining. The IMF needs to review whether to release the $2.5 billion that is still pending to Pakistan before the deadline. The tranche has been stalled since November.

In addition to the budget revisions, Finance Minister Dar also announced other changes, such as an increase in the petroleum levy and the removal of import restrictions. These measures address the IMF's concerns and align with the fiscal tightening measures for Pakistan's economy.

The revision of the budget followed a meeting between Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva during a global financing summit in Paris. Subsequent virtual talks between the two sides took place over three days.

Securing the IMF funds is crucial for Pakistan as it unlocks other bilateral and multilateral financing options for the debt-ridden country. The funds are part of the ninth review of the $6.5 billion EFF agreement reached earlier this year. Photo by Uroojmirza71, Wikimedia commons.