Pakistan has faced difficulties in achieving specific targets set by the International Monetary Fund (IMF), particularly in the power sector’s circular debt and primary balance surplus.
The IMF mission has shown concern over Pakistan’s inability to meet the circular debt target in the power sector and the primary balance surplus. Sources reveal that the primary balance surplus reached Rs. 400 billion, falling short of the Rs. 417 billion target established by the IMF.
The IMF mission is particularly worried about the circular debt within the power sector, with plans to review this target in the next two days of policy-level talks.
Dr. Shamshad Akhtar, Pakistan’s Caretaker Finance Minister, has confirmed the government’s commitment to controlling the budget deficit by reducing expenditures. Minister Akhtar emphasized that the tax burden would not be increased for the public and that the IMF’s tax target of Rs 9,415 billion would remain consistent. She outlined the government’s austerity measures and conveyed the IMF’s satisfaction with the caretaker government’s actions, including development spending and the Benazir Income Support Programme (BISP).
The caretaker government has assured the IMF that it will not impose new taxes, a significant decision given the current financial situation.
Under a caretaker government, Pakistan received a boost from an IMF loan program in July, preventing a sovereign debt default. Under the $3 billion standby arrangement (SBA), Pakistan received its first tranche of $1.2 billion in July.
An ongoing IMF mission review is expected to continue until December 15, and a successful review could unlock an additional $710 million for Pakistan in December.