Budget 2024-25 wins IMF praise amid calls for more fiscal tightening

IMF reiterated tough decisions crucial for progress, calls for fiscal discipline despite the approval of FY24-25

ISLAMABAD:

The International Monetary Fund (IMF) has praised the stringent economic measures outlined in the budget, citing them as essential for economic stability, according to sources.

The sources also reveal that there has been progress in the talks between Pakistan and the IMF. The Fund, they said, has welcomed the tough economic decisions in Pakistan's federal budget and praised the positive role of political parties. The IMF has also appreciated the limitation of tax exemptions for economic improvement.

However, the IMF has reiterated its call for fiscal discipline despite the approval of the Federal Budget 2024-25.

Sources also revealed that the IMF has urged Pakistan to raise electricity and gas prices by July 10, preferring implementation by July 1, with immediate action on NEPRA's decisions for electricity price increases.

Read PM Shehbaz acknowledges IMF input in Budget 2024-25

Gas rates will increase to reduce subsidies in the upcoming fiscal year, aligning with IMF conditions for new loan programs.

An IMF delegation is expected in Pakistan in mid-July.

However, many consider the tax system unjust as the Commonwealth and Development Office (FCDO) of the UK Chief Economist Professor Adnan Khan reiterated that the poorest 10% of citizens were paying a larger share of their income in taxes than the richest 10%.