Pakistan plans austerity in budget after winning IMF bailout

Pakistan will introduce measures to tighten expenses in its annual budget for the next fiscal year, after the nation averted an economic crisis.

The next budget will be based on austerity, Finance Adviser Abdul Hafeez Shaikh told reporters Saturday, referring to the spending plan for the year beginning July. The government targets to cap flow of circular debt in the power sector by 2020, he added.

Pakistan this month secured a $6 billion loan from the International Monetary Fund to help avert a balance-of-payments crisis following high fiscal and current-account deficits and dwindling foreign exchange reserves. Also in May, the nation’s central bank raised its benchmark interest rate to a record to address inflationary pressures and the recent exchange rate depreciation and the impact of elevated fiscal deficit.

The IMF loan terms prescribe curbing expenditure and spending prudently, while controlling debt and stopping leakages in loss-making companies, he said.

The government targets to raise 5.5 trillion rupees ($36 billion) revenue next fiscal year, Hafeez said. As much as 216 billion rupees will be set aside for subsidies to the power sector and 250 billion rupees will be allocated to the farm sector, whose output likely declined by 4% in the past two years, he added.

First Published:
May 26, 2019 14:11 IST

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