The federal government is set to unveil the Economic Survey of Pakistan 2023-24, a comprehensive pre-budget document detailing the major socio-economic achievements of the outgoing fiscal year, at 5 PM today (Tuesday). Finance Minister Muhammad Aurangzeb will present the survey in the National Assembly, according to a statement issued by the finance ministry.
This release precedes the federal budget for the fiscal year 2024-25, which is scheduled to be presented on June 12 (Wednesday). The coalition government, led by Pakistan Muslim League-Nawaz (PML-N), is anticipated to outline ambitious fiscal targets in the Budget 2024-25 to bolster its case for a new bailout deal with the International Monetary Fund (IMF), according to officials and analysts.
Despite severe financial constraints and reductions in development funding under the IMF program, the Annual Plan Coordination Committee (APCC) has recommended Rs1,221 billion for the federal development program for the financial year 2024-25. This will be the first budget presented by the current government.
As Pakistan seeks a loan program to avoid a default amid a slow-paced economy, the IMF has urged the country to increase provincial taxes, particularly on agriculture, sales tax on services, and property tax. Pakistan is negotiating with the IMF for a loan estimated between $6 billion and $8 billion to prevent a default, as its economy is growing at the slowest rate in the region.
“The budget holds critical significance for Pakistan’s IMF program and must close the gap between our revenue collection and total expenditure; it is thus likely to be contractionary,” said Ali Hasanain, an associate professor of economics at the Lahore University of Management Sciences.
Last summer, Pakistan narrowly avoided a default thanks to a short-term IMF bailout of $3 billion over nine months. While fiscal and external deficits have been managed, this has led to a significant drop in growth and industrial activity, as well as high inflation, which averaged nearly 30% in the last financial year and 24.52% over the past 11 months.
The growth target for the upcoming year is expected to be higher at 3.6%, compared to 2% this year and an economic contraction last year. Prime Minister Shehbaz Sharif has committed publicly to implementing tough reforms since his election in February, but high prices, unemployment, and a lack of new job opportunities have increased political pressure on his coalition government.
Another key aspect of the budget will be the targets set for proceeds from privatization. Pakistan is planning its first major sale in nearly two decades, starting with a stake in its national airline. This is expected to be the first in a series of sales of loss-making entities, particularly in the troubled power sector.
