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New IMF Loan Program Only Possible After Budget

Discussions between Pakistan's economic team and the International Monetary Fund (IMF) Mission this week will most likely end without a staff-level agreement, sources in the Finance Ministry told ProPakistani. Sources said policy-level talks have so far failed to yield any conclusive result. The lender's mission led by Nathan Porter will leave Pakistan after three days. Negotiations on the new bailout program will continue virtually in the coming weeks. The IMF Mission will issue a report on the country's overall economic situation after concluding its current visit, sources added. Sources said the IMF will review Pakistan's proposed budgetary measures for the next fiscal year, with the final decision on a new program hinging on the budget. A staff-level agreement with the Washington-based lenders is expected after passage of next fiscal year's federal budget. Interest Payments of Rs. 9.7 Trillion Next Fiscal Year During the ongoing policy-level talks, Pakistan has presented the country's macroeconomic framework to the IMF. The lender sees a GDP growth rate of 3.5 percent next fiscal year, while the Finance Ministry is aiming slightly higher at 3.7 percent, Finance Ministry sources added. Inflation estimates also differed between the two sides, with the IMF forecasting a 12.7 percent rate compared to the Finance Ministry's slower 11.8 percent estimate. Sector-specific growth targets were outlined. Sources said the agriculture sector is expected to grow by 3.5 percent, the services sector by 3.8 percent, and the industrial sector by 4 percent in the next financial year. Interest payments on loan repayments were projected to exceed Rs. 9,700 billion in FY25. Exports, Remittances to Cross $61 Billion The IMF estimated a current account deficit at $4.6 billion, while the Finance Ministry set a target of $4.2 billion. In terms of foreign exchange earnings, exports and remittances are expected to generate over $61 billion, with the domestic export target set at $32.7 billion for FY25. The Finance Ministry p rojected $58 billion in imports while IMF said $61 billion. Remittances are expected to clock in at $30.6 billion in the upcoming fiscal year. Meanwhile, the fiscal deficit in FY25 is estimated at Rs. 9,600 billion. Pension Bill to Rise By Over Rs. 150 Billion The Finance Ministry has proposed allocating Rs. 1,000 billion for federal development projects, which goes against the IMF's target of curbing development funding next fiscal year. The Ministry also wants to earn an additional Rs. 1,300 billion in tax revenue in FY25, meaning that the Federal Board of Revenue (FBR) will likely face the daunting task of collecting Rs. 12,400 billion in tax next fiscal year. The pension bill is also expected to increase from Rs. 801 billion to Rs. 960 billion, sources added. These discussions will continue virtually after the IMF mission departs on Friday. An SLA looks viable and achievable only after the federal budget approval next month. Source: Pro Pakistani

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