Pakistan unveils $50 billion budget with higher defense spending

Islamabad, Jun 9 (EFE).- Pakistan’s Finance Minister Ishaq Dar on Friday presented a Rs14.5 trillion ($50.5 billion) federal budget for the fiscal year 2023-24, with a 15.4 percent increase in defense expenditure amounting to a total of some $6.3 billion.

While presenting the budget in the National assembly or lower house of the parliament, Dar revealed that the government is targeting a fiscal deficit of 6.54 percent of the GDP for the 2023-24 fiscal year, much higher than the current year’s original estimate of 4.9 percent.

For the next year, GDP growth had been budgeted at 3.5 percent, Dar said, calling it a “modest target,” while adding that the government was eyeing an inflation of 21 percent for the coming financial year starting July 1.

Dar mentioned that although the nation suffered massive losses of $30 billion due to unprecedented floods, the government was seeking to resume the suspended IMF program and realign the country on the road of development.

The government of Prime Minister Shehbaz Sharif is hoping to persuade the International Monetary Fund (IMF) to resume its $6.5 billion program it agreed with Pakistan in 2019 as the country grapples with a series of economic and political crises.

The IMF, to continue its aid program, had demanded a number of measures from Pakistan, including reversing subsidies, a hike in energy and fuel prices, increasing its key policy rate, a market-based exchange rate, arranging for external financing and expanding taxes.

Before Dar’s budget speech, PM Shebaz Sharif in a televised address to his cabinet said that he was hopeful that the agreement with the IMF would go to its board for approval later this month.

“We have implemented all the prior actions asked by the IMF completely. There is nothing left out which can become a hurdle in it,” said the premier.

He disclosed that Saudi Arabia and the United Arab Emirates helped Pakistan meet additional conditions of having assurances of external financing.

According to the premier, Saudi Arabia helped with $2 billion and the UAE with $1 to fill the gap in external financing demanded by the IMF.

Pakistan missed almost all of its economic targets set in the last budget, most notably its growth target of 5 percent.

According to the finance ministry, the growth is now projected at 0.29 percent for the fiscal year ending June 30.

Foreign exchange reserves have depleted below $4 billion, according to data released by the State Bank of Pakistan on Thursday, enough to cover barely a month of imports. EFE


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