Finance Minister Ishaq Dar on Saturday said the federal government has introduced a number of changes to its fiscal year 2024 budget in a last-ditch effort to clinch a stalled rescue package with the International Monetary Fund (IMF).

“Pakistan and IMF had detailed negotiations as a last effort to complete the pending review,” he said while addressing the National Assembly.

For the fiscal year starting next month, the federal government will raise a further Rs215 billion in new tax and cut Rs85bn in spending, as well as a number of other measures to shrink the fiscal deficit, he said.

Dar said that for the past few months, the nation was questioning whether the IMF’s ninth review would be successful or not, adding that he wanted to take the people into confidence on the matter.

He said the government had completed all prior actions and achieved compliance on the Fund’s demand but Pakistan’s case could not be put in front of it due to the external financing gap.

Dar said that it was decided between Pakistan and the IMF for a “last final push” to move the review forward, following which detailed negotiations were held with an IMF delegation in the last three days to complete the ninth review.

The finance minister said the suggestion for Rs215bn in new taxes came about as a result of the talks, adding that care was taken that the tax burden would not fall on the poor and weak segments.

He further said the Rs85bn spending cut would also be achieved without any curtailment in the federal development budget or the salaries and pensions of government employees.

Providing updated figures for the FY24 budget, Dar said the revenue collection target for the Federal Board of Revenue was increased to Rs9,415bn from Rs9,200bn. The share of the provinces would be increased to Rs5,399bn from Rs5,276bn.

The target for the federal government’s total expenditure was increased to Rs14,480bn from Rs14,460bn.

“Due to all of the above measures, there will be an improvement in the overall budget deficit,” Dar said.

The finance minister said the petrol levy will be raised from Rs50 to Rs60 and will be capped at the new ceiling for any future changes.

He also announced the lifting of restrictions on all imports enforced in December in a bid to cut the current account deficit, which has been one of the major concerns by the IMF to release the funds.

Money allocated for cash handouts to the poor was also revised from Rs450bn to Rs466bn for the fiscal year 2024, Dar said.

PM’s third meeting with IMF chief

Meanwhile, a statement issued by the PML-N said Prime Minister Shehbaz Sharif had held a third meeting with IMF Managing Director Kristalina Georgieva before his departure for London in which he had reiterated Pakistan’s commitment to complete the Fund’s programme.

The managing director had “appreciated” PM Shehbaz’s commitment to the country, according to the statement.

Shehbaz had said the Fund’s goals for the country could be better met through its economic recovery.

Talks with IMF

Pakistan’s ninth review by the IMF under the 2019 Extended Fund Facility (EFF) for the release of $1.2bn remains pending with less than seven days remaining till the programme’s expiry on June 30.

Last week, the IMF had raised several issues with Pakistan’s budget for fiscal year 2024, saying that some of the proposed measures went against the EFF programme’s conditionality.

Esther Perez Ruiz, IMF representative for Pakistan, had earlier said Pakistan needed to satisfy the IMF on three counts, including the budget for the upcoming fiscal year, before its board will review whether to release the pending tranche.

With the programme’s expiry just days away and the IMF seemingly unconvinced with the budget, fears that the deal will not materialise have soared.

For its part, the government responded to the IMF’s concerns, saying that it was “flexible” on the budget and remained engaged with the international lender to reach an “amicable solution”.

With reserves at critical levels for the past several months, Pakistan is in dire need of an IMF bailout, without which it may default.

The country was expected to get around $1.2 billion from the lender in October last year as part of the EFF’s ninth review. But almost 8 months later, that tranche has not materialised as the IMF says Pakistan has been unable to meet important prerequisites.

Because of this delay, the programme’s tenth review, which was originally part of the plan, is all but out of the question.

On Thursday, Prime Minister Shehbaz Sharif met the IMF chief and apprised the global lender of steps taken to address Pakistan’s flailing economy, expressing hope that the funds allocated under the EFF would be released as soon as possible.