Sources within the government reveal that the latest meeting on 30 May ended without a clear breakthrough, leaving critical issues unresolved and tensions rising
By our correspondent
ISLAMABAD: Pakistan and the International Monetary Fund (IMF) are poised to enter a critical phase of negotiations over the federal budget for the upcoming fiscal year, with talks expected to resume within the next two days. This round of discussions comes amid mounting pressure on the government to align its budgetary plans with the stringent conditions laid out by the IMF as part of the country’s ongoing loan program.
Sources within the government reveal that the latest meeting on 30 May failed to yield a definitive breakthrough, leaving key issues unresolved. At the heart of the impasse lies the tax revenue target, a central and highly contentious element of the budget framework. Both sides remain engaged in delicate negotiations to finalize realistic projections for tax collection across various economic sectors, a task complicated by Pakistan’s fragile economic landscape and persistent challenges in revenue mobilization.
Defence expenditure and subsidy allocations also continue to fuel debate. These components carry significant political weight and financial implications, making consensus difficult. The government is acutely aware of the need to manage public expectations while adhering to IMF demands for fiscal discipline, a balancing act that has become increasingly precarious as the deadline for budget approval draws near.
On a more optimistic note, there are signals of progress regarding potential relief for the salaried class. Reports suggest the IMF is open to considering Pakistan’s proposals aimed at easing the tax burden on wage earners, a move that could provide some much-needed respite to millions already grappling with inflation and economic uncertainty.
Structural reforms in the energy sector remain a prominent agenda item, with discussions focusing on the revision of electricity tariffs. Both Pakistan and the IMF reportedly agree on the introduction of a carbon levy designed to promote climate financing while bolstering fiscal stability. However, the specifics of the levy, including its exact rate and implementation timeline, are yet to be finalized, reflecting the complex trade-offs involved.
