With zero net zero stock accumulation, Pakistan should be able to reach its fiscal year 2023–24 circular debt management plan (CDMP) objective of Rs2.3 trillion, according to the IMF’s staff report for the second and final review under the recently concluded $3 billion Stand-By Arrangement.
“Prompt notification of the FY25 annual rebasing and additional collections efforts, including measures to improve and institutionalize digital monitoring, will be critical to the continued prevention of further circular debt flow,” the IMF stated in its study.
“The authorities should proceed with the agricultural tube well subsidy reform in parallel; a finalized plan is anticipated by the end of FY24.”
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The pressure on banks to finance the government would increase if post-programme external financing payments were delayed, which would worsen the private sector’s exodus. External stability would also be negatively impacted by geopolitically driven increases in commodity prices, shipping delays, or tighter global financial conditions, according to the IMF.
In the next FY24–25 budget, Pakistan has also been urged by the lender to stop providing power subsidies to the manufacturing sector.
It is important to note that the International Monetary Fund (IMF) technical specialists team has arrived in Pakistan for discussions over a new loan program and budgetary planning.
The team is expected to remain in Pakistan for over ten days, and further IMF mission members are expected to arrive sometime on May 16th, according to the sources.
The expedition will negotiate with Islamabad regarding a new financial initiative.
Previous reports claimed that the administration had hastened budget target preparations before to the IMF mission’s arrival. The Ministry of Finance has instructed pertinent ministries to meet deadlines in this regard.
According to sources, the approval of a strategic paper on the FY25 budget will also be sought from the federal cabinet before the arrival of the IMF mission.