The disagreements between the Pakistan government and the International Monetary Fund (IMF) over key budgetary figures and subsidy allocations have delayed the budget for the next fiscal year 2025-26, pushing its presentation from June 2 to June 10, Business Recorder reported.
During a session of the National Assembly Standing Committee on Commerce, chaired by Khurshid Ahmed Junejo, Joint Secretary (Corporate Finance) Sajjad Azhar highlighted the challenges the government faces in reconciling its budgetary figures.
Azhar explained that the delay is due to difficulties in finalising subsidy figures under Pakistan’s current Extended Fund Facility (EFF) agreement with the IMF. He noted that the IMF has imposed a cap on subsidies and rejected any changes to the recently presented budget figures.
The meeting also discussed outstanding receivables owed to the Trading Corporation of Pakistan (TCP), amounting to Rs 317.5 billion, including Rs 93.693 billion in principal and Rs 223.797 billion in accrued markup.
Tensions arose during the session between Azhar and TCP Chairman Syed Rafeo Bashir Shah over the calculation of the markup and loans from commercial banks. Shah argued that the TCP had distributed imported wheat and urea as per directives from the Economic Coordination Committee (ECC), but payments had been pending since 2010.
Azhar countered, stating that the ECC had never approved covering the markup costs through the federal government and explained that the Finance Ministry had held multiple meetings to reconcile these dues. The State Bank of Pakistan (SBP) was also approached to help reduce the markup rates, but it clarified that no relief could be extended since the agreements with the commercial banks were based on standard terms.
The committee members urged the Finance Ministry to allocate additional subsidies to allow for partial payments to the TCP. Azhar also mentioned that the Finance Ministry had recently secured commercial loans for Pakistan International Airlines (PIA) without any discounts and was exploring similar arrangements to manage circular debt. The borrowing terms are based on the Karachi Interbank Offered Rate (KIBOR) minus 0.2 percent, and a summary on this matter will be presented to the federal cabinet.
He further noted that the Punjab government had committed to paying Rs 26 billion, with the federal government matching this amount in the next fiscal year. Additionally, Rs 15 billion will be disbursed to TCP on behalf of the Utility Stores Corporation (USC) and National Fertilizer Marketing Limited (NFML), pending authorizations from the relevant ministries. Another Rs 30 billion will be allocated in the upcoming budget.
Following a detailed discussion, the panel agreed to release the undisputed amount of Rs 90 billion to TCP in the first phase. A mechanism will be developed to address the issue of markup payments in the second phase, and TCP will conduct a special audit of its commercial loans to identify any discrepancies.
Panel members Shaista Pervaiz Malik and Rana Atif expressed concerns regarding the markup and called for a swift resolution of the outstanding payments.
