In a significant development, Pakistan and IMF have agreed on the budget for the following fiscal year 2022–2023. After Pakistan complied with a number of strict requirements, including a steady increase in the petroleum charge up to Rs. 50 per liter, progress was made.
The discussions moved along quickly late on Tuesday during a meeting between the Pakistani government, represented by Finance Minister Miftah Ismail, and the IMF staff delegation.
According to a statement by Esther Perez Ruiz, the IMF Resident Representative in Pakistan, “discussions between the IMF staff and the government on policies to strengthen macroeconomic stability in the following year continues, and significant progress has been made over the FY23 budget.”
The administration has also agreed to a number of other conditions of the international lender in addition to introducing the gasoline levy. The budget’s proposed tax target of Rs. 7 trillion has been increased by the Federal Board of Revenue.
It is important to note that, as part of the budget for FY23, Pakistan was required by the IMF to make revisions to the new income tax slabs for the salaried class.
Tuesday’s closing rate for the Pakistani Rupee (PKR) versus the US Dollar (USD) was Rs. 211.48, a new record low. The value of the dollar relative to the PKR has increased by Rs. 29.13 since the new administration took office on April 11.
The country’s foreign reserves were in such a critical situation that the central bank had to make a statement denying rumors that the reserves held by the State Bank of Pakistan (SBP) had dried up.
The SBP’s foreign exchange reserves were $8.985 billion as of June 10—a $241 million decrease. The current level of central bank reserves is the lowest since November 22, 2019.