Budget talks with IMF start today
Listen to article
The International Monetary Fund (IMF) will begin virtual discussions on Pakistan's upcoming budget on Wednesday (today), as the visit of its mission to Islamabad has been delayed due to security concerns in the region, government sources told The Express Tribune on Tuesday.
The virtual talks will take place as the global lender has appointed a new mission chief to Pakistan. According to sources, the IMF mission delayed its scheduled arrival in Islamabad on Tuesday due to uncertainty caused by Indian aggression, which affected air travel across the region.
However, the sources added that the mission is now expected to travel to Islamabad over the weekend, subject to the security situation. They emphasized that the adjustment would not adversely affect the work or the original programme schedule.
The talks are set to begin on May 14 (today) and continue until May 16. "Virtual discussions are expected to be held. For the second and final leg of the talks, the IMF team is expected to arrive in Islamabad on Saturday and stay until May 23," the source said.
The IMF's Resident Representative to Pakistan Mahir Binici did not respond to a request for comment on the change in the travel plan. Finance Ministry Spokesperson Qumar Abbasi also did not respond to questions on the change in the travel plans.
Meanwhile, the IMF appointed Iva Petrova, a Bulgarian origin staff member, as new Mission Chief to Pakistan. She would join the discussions along with the outgoing Mission Chief Nathan Porter — who served in the position for an extended term.
Porter was known for his firm stance on policy issues, but was averse to public interactions. He also kept a tight control over the Finance Ministry's media policy. Mahir did not comment whether both outgoing and new mission chiefs would join both rounds of talks.
Petrova, who holds a PhD degree in economics from the Michigan State University, has been serving as the IMF Mission Chief to Armenia. Previously, she had served with the missions to Israel, Iceland and Latvia.
The government of Pakistan is planning to unveil the budget for fiscal 2025-26 on June 2 — before the Eidul Azha holidays. This will be Finance Minister Muhammad Aurangzeb's second budget speech, which has to be in line with the parameters that the IMF will set during these talks.
The fiscal policy is expected to remain tight in the next fiscal year too. The IMF has asked Pakistan to make a budget on the assumption of having 1.6% of the GDP primary budget surplus, which will require generating about Rs2 trillion over and above the non-interest expenses.
The tax target for the Federal Board of Revenue (FBR) is proposed to be 11% of the GDP or Rs14.3 trillion. The IMF would examine whether the government plans to take credibly realistic measures to back the new tax target, said the sources.
The size of the federal budget still remains tentative due to redoing of defence needs and the government plans to announce less than Rs18 trillion budget. The overall budget deficit target after incorporating large provincial cash surpluses is projected at 5.1% of the GDP or Rs6.7 trillion, they said.
According to the sources, on the first day of talks the Finance Ministry would apprise the IMF mission of the fiscal developments during July-March period of the current fiscal year. It will also share details of supplementary grants approved during the fiscal year.
The IMF has set multiple fiscal conditions, whose successful completion has so far helped smooth continuation of the programme despite initial setbacks. Pakistan has met the IMF targets for a primary budget surplus by the federal government, as well as net revenue collection and cash surplus targets by the four provinces.
Against a primary surplus target of Rs2.7 trillion, the federal government reported a surplus of Rs3.5 trillion, or 2.8% of GDP. This higher surplus was primarily due to fully booking the annual central bank profit in the first quarter, with the entire estimated profit of Rs2.5 trillion already accounted for.
The four provinces collectively generated a cash surplus of Rs1.028 trillion during the first nine months, exceeding the IMF target by Rs25 billion. The federating units also generated Rs685 billion in tax revenues, surpassing the IMF target by Rs79 billion. But against a nine-month revenue target of over Rs9.2 trillion, the FBR pooled Rs8.5 trillion, falling short of the goal by Rs715 billion.
The IMF has also asked the government to give an update on any savings from the planned downsizing of the government. The next fiscal year's non-tax target will also be discussed during the first day of the talks, mainly the prospects of petroleum levy collection and the central bank profits.
The FBR will give an update on the tax performance in April and the chances for the remainder of this fiscal year. The tax shortfall has ballooned to a staggering Rs830 billion in the first 10 months of the fiscal year, despite the government imposing record additional taxes and reducing refunds.
Only in the month of April, the government added around Rs135 billion in the tax shortfall, breaching commitment to the IMF that the shortfall against the original annual target will not be more than Rs640 billion.
The FBR has provisionally collected Rs9.3 trillion in taxes by the end of April. Though, the collection was around 27% or Rs1.95 trillion higher than the previous fiscal year, yet it is not enough to stay on track.
The sources said that on the first day, the discussions will also take place on the so-called enforcement measures in the areas of track and trace, retailers scheme and compliance risk management. The FBR has miserably failed in all these areas and its collection is largely driven by the additional tax measures.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
40 minutes ago
- Business Recorder
Pakistan condemns India's rejection of Indus Waters Treaty, warns of dangerous precedent
Pakistan's Foreign Office issued a strongly worded statement today condemning Indian Home Minister Amit Shah's declaration that New Delhi would 'never restore' the Indus Waters Treaty (IWT), calling it a blatant violation of international law and a threat to regional stability. The rebuke comes amid escalating tensions between the two nuclear-armed neighbors over water-sharing rights, a long-standing flashpoint in their fraught relationship. India says it will never restore Indus water treaty with Pakistan In its official response, the Foreign Office spokesperson emphasized the treaty's legal sanctity, stating, 'The Indus Waters Treaty is not a political arrangement, but an international treaty with no provision for unilateral action.' The statement accused India of 'brazen disregard' for its obligations under the 1960 World Bank-brokered agreement, which governs the sharing of the Indus River system's waters between the two countries. 'India's illegal announcement to hold the Treaty in abeyance constitutes a clear violation of international law, the provisions of the Treaty itself, and the fundamental principles governing inter-state relations,' the spokesperson asserted. The statement further warned that such conduct 'sets a reckless and dangerous precedent' and undermines global trust in treaty-based diplomacy. The Foreign Office also condemned what it termed the 'weaponization of water for political ends,' a pointed reference to Shah's remarks, which were made ahead of elections in India's Bihar state, where water-sharing disputes have long been a contentious issue. 'This irresponsible behavior contradicts established norms of responsible state behavior,' the spokesperson added, demanding that India 'immediately rescind its unilateral and unlawful stance.' Pakistan reaffirmed its commitment to the treaty and vowed to 'take all necessary measures' to safeguard its water rights, hinting at potential diplomatic or legal recourse. The Indus Waters Treaty, signed in 1960, has survived multiple wars and crises but has faced mounting strain in recent years.
Express Tribune
4 hours ago
- Express Tribune
India rules out restoring Indus Waters Treaty, vows to divert water from Pakistan
Listen to article India will never restore the Indus Waters Treaty with Islamabad, and the water flowing to Pakistan will be diverted for internal use, Home Minister Amit Shah said in an interview with Times of India on Saturday. India put into "abeyance" its participation in the 1960 treaty, which governs the usage of the Indus river system, after 26 civilians in Indian Ilegally Occupied Jammu and Kashmir were killed in what Delhi described as an act of terror. The treaty had guaranteed water access for 80% of Pakistan's farms through three rivers originating in India. Pakistan has denied involvement in the incident, but the accord remains dormant despite a ceasefire agreed upon by the two nuclear-armed neighbours last month following their worst fighting in decades. "No, it will never be restored," Shah told the daily. "We will take water that was flowing to Pakistan to Rajasthan by constructing a canal. Pakistan will be starved of water that it has been getting unjustifiably," Shah said, referring to the northwestern Indian state. Last month, Reuters reported that India plans to dramatically increase the water it draws from a major river that feeds Pakistani farms downstream, as part of retaliatory action. Pakistan's foreign ministry did not immediately respond to Reuters' request for comments. But it has said in the past that the treaty has no provision for one side to unilaterally pull back and that any blocking of river water flowing to Pakistan will be considered "an act of war". Islamabad is also exploring a legal challenge to India's decision to hold the treaty in abeyance under international law.
Express Tribune
4 hours ago
- Express Tribune
Indian media claims about ceasefire request rejected
Listen to article Pakistan has categorically denied Indian media reports claiming it requested a ceasefire following recent hostilities with India. In a statement issued Friday, the Foreign Office spokesperson dismissed the reports as 'entirely baseless,' asserting that Pakistan responded to Indian aggression in line with its right to self-defence. Deputy Prime Minister and Foreign Minister, Senator Mohammad Ishaq Dar, had in multiple media appearances stated that Pakistan's military response was a direct reaction to Indian provocations. The Foreign Office clarified that at no point did Pakistan initiate or request a ceasefire. The spokesperson detailed that the ceasefire was arranged through third-party diplomatic channels, specifically involving the United States and Saudi Arabia. Read: Rubio praises Pakistan's regional peace efforts in call with PM According to the statement, on May 10 2025 at approximately 8:15 am, US Secretary of State Marco Rubio called Senator Dar to convey that India was ready to ceasefire if Pakistan agreed. Dar confirmed Pakistan's agreement, following which Saudi Foreign Minister Prince Faisal also contacted him around 9:00 am with a similar message and received the same confirmation. The Foreign Office labelled the Indian media reports as a 'distortion of facts' and reiterated that Pakistan agreed to a ceasefire only after India's willingness was conveyed via diplomatic channels. Islamabad reaffirmed that its position was based on sovereignty and self-defence, and external facilitation helped bring about the cessation of hostilities. Read more: Trump claims credit for India-Pakistan ceasefire despite Modi's denial India and its Prime Minister Narendra Modi, on the other hand, have consistently contradicted Washington and Islamabad by claiming that the May ceasefire between India and Pakistan resulted from direct communication between the two countries' militaries, not third-party mediation. The White House has not yet responded to India's latest remarks.
