Mini-budget unnecessary as IMF remains satisfied with Pakistan's economic outlook

The federal government will not be bringing forth a new mini-budget before the end of June 2025. Initially, amid fears of talks breaking down with the International Monetary Fund (IMF), reports had claimed that the global lender may not extend credit to cash-strapped Pakistan.

However, the IMF appears to be satisfied with the government’s attempt to ensure that the country stays on the roadmap laid out by the international creditor. This ‘roadmap’ included a slew of targets which Pakistan had to meet to secure the disbursement of the next $1 billion tranche of the Extended Fund Facility (EFF) program.

Pakistan-IMF talks are expected to conclude today and upon finalization, the IMF’s visiting delegation will draft an assessment report. This document will then be sent to the IMF’s executive board after which a decision on providing additional financial assistance to Pakistan will be reached.

According to credible reports, today’s agenda revolves around reviewing budget targets which had been set by the IMF at the last EFF program meeting. Officials are slated to evaluate the performance of the economy for the current fiscal year (FY) – FY 2024-25.

Many believe that the international creditor will also go over the tax shortfall which Pakistan has experienced. A possible remedy that the IMF could suggest would be the introduction of new tax goals to offset FY 2024-25’s shortfall.

Before discussions started, the IMF believed that the federal government would fail to reach its tax target of Rs12.9 trillion. This is because their calculations suggested that Islamabad would miss its annual tax collection target by a staggering Rs490 billion.

Today’s meeting is set to conclude with both Islamabad and the IMF submitted finalized proposals regarding the trajectory the economy should follow. While Pakistan has met most targets laid out by the creditor, the IMF wants to witness greater changes to ensure that the economy is on the right track.

The aforementioned changes concern the abolishment of tax exemptions on electric vehicles and solar panels. The sky-high price of electric vehicles, guarantees that only a specific stratum of the population can afford them – the ‘super wealthy’.

Removing tax exemptions on such luxury products, such as electric cars, could alleviate pressures on the national exchequer as the federal government will be able to realize more revenues from their sales.

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