The first economic review of Pakistan’s $7 billion bailout program is underway, with discussions between Pakistan and the International Monetary Fund (IMF) focusing on the country’s fiscal performance and targets for the next financial year.
According to sources, the IMF has stressed the need for Pakistan to increase revenue and cut expenditures. In response, the government has proposed an ambitious tax revenue target of over Rs. 15 trillion for the next fiscal year, with the tax-to-GDP ratio expected to rise to 13%. Non-tax revenue is projected to reach Rs. 2.745 trillion during the same period.
The Ministry of Finance anticipates that economic growth will exceed 4% in the next fiscal year, compared to an estimated 3.5% for the current year. Inflation is also expected to drop to single digits next year, offering some relief to the public.
Pakistan will require over $20 billion in external financing for the next fiscal year, sources disclosed. Deposits from friendly countries are expected to be rolled over to help meet these financial needs.
During the discussions, the IMF was briefed on the government’s rightsizing measures aimed at reducing the burden on the national exchequer. As part of these efforts, the government has permanently abolished 150,000 vacant positions in public institutions, saving significant resources.
The government also plans to offer voluntary retirement packages to employees in various departments, with dues to be paid under a golden handshake scheme. Additionally, the government assured the IMF of its intention to amend the Civil Servants Act 1973 to facilitate the elimination of redundant positions.
