Govt likely to present next fiscal year’s budget in May 2022

The Pakistan Muslim League Nawaz government is likely to present the next fiscal year’s budget in May.

Sources said that the economic team of Prime Minister Shahbaz Sharif will present the fiscal year budget 2022-23 in the last week of May.

Presently, the Finance Ministry is working on the budget as per the notified budget calendar for 2022-23.

Sources said that there is an immediate need to start negotiations with the International Monetary Fund (IMF) in order to put the EFF back on track for ensuring inflows from other multilateral such as ADB and WB.

They added that these inflows are very important to support the foreign exchange reserves therefore the present government strategy is to restart the fund program with the assurance that it would not only undertake new taxation measures such as revising the personal income tax slabs but withdrawing billions of rupee tax exemptions in order to reduce the budget deficit to a reasonable level.

This would ensure $2 billion from the IMF program and project lending in the pipeline from other multilateral institutions, sources added.

Sources said that the government may request the IMF for combining the seventh and eighth reviews in June and by that time it would be in a position to fulfill the conditionality of the IMF.

Sources said that the present government has to undo the Relief Package announced by former PM Imran Khan on February 28, 2022, to cut petrol, and diesel prices by Rs10 and electricity prices by Rs5 per unit for four months as well as grant tax amnesty for the industrial sector.

Sources who are part of the negotiations team in the previous government stated that the discussion on the seventh review of the EFF program remained inconclusive as IMF had raised serious concerns over the amnesty scheme last month.

Former Principal Economic Advisor Finance Ministry Ashfaq Hasan said that the government has to increase petrol and electricity prices to start talks with the IMF. 

The government’s priority would be to complete the remaining reviews of the IMF program before making up its mind “whether it wants to take another IMF program after September 2022”.

He said that the IMF expected to be lenient as the new government’s relations with the US are improving compared to the previous government. 

The government should also save the dollar by preventing unnecessary imports and restoring the confidence of overseas Pakistanis to increase remittances.

The major challenge for the government would be how to gain the trust of overseas Pakistanis because of its perception issue.

An increase per unit of Rs4.95 electricity price is an indication to the fund that the government wants to re-start the IMF program, he added.