Friday, June 09, 2023
KARACHI: Former finance minister Miftah Ismail has said the budget 2023-24 is in line with the International Monetary Fund’s (IMF) demands and not very expansionary.
Ismail — a vocal critic of incumbent Finance Minister Ishaq Dar — said that the Washington-based lender demanded a primary surplus of 0.5% and the government has set it at 0.4% which is close to the lender's benchmark so "we can say that is in line with the IMF's expectation".
The former financial czar was speaking on Geo News special budget transmission on Friday, giving his response on an Rs14.46 trillion budget eyeing a deficit of 6.54% of economic output in the fiscal year starting on July 1.
Dar announced the target during his budget speech to the National Assembly.
The budget needs to satisfy the IMF to secure the release of stuck bailout money for the crisis-struck country, which is due to hold a general election by November.
The government had prepared "a responsible budget, not an election budget", the finance minister said.
He reiterated that the government hoped to get an agreement with the Washington-based lender soon, echoing comments made earlier in the day by Prime Minister Shehbaz Sharif as he addressed his cabinet.
Ismail also said that if the IMF thinks that "your revenue and expenditure targets are practical then it is not a very expansionary budget".
“The IMF focuses on two things — primary deficit and primary surplus — and we are close to it as there's only a difference of Rs125 billion.”
He said that the way the government is increasing taxes and giving money to the provinces, this budget is not sustainable.
He also criticised authorities concerned for announcing a hefty increase in salaries. “More than half of the expenses in civil government are salaries.”
He asked for increasing the allocation for the Benazir Income Support Program (BISP) and demanded a cut in funds for the lawmakers.
Miftah, when asked if there will be a shortfall in the tax revenue this year, replied that the government had to suffer huge losses due to the devastating floods this year in which over Rs100 billion were provided to the poor as subsidies as well as the money spent of infrastructure which shows there have been some major changes made in the budget.
He said that keeping in view the interest rate and GDP tax, the deficit target can be achieved. "The most worrying thing in this year's budget is that our revenue receipts are Rs6,800 billion and the interest it has to pay is Rs7,500 billion which means that the government is borrowing money just to pay interest and not to spend which is called death trap."
Miftah said that a lot of restructuring in the budget is needed as it is not sustainable.
Speaking about the increased salaries and pensions of the government employees, the former finance minister said that it is due to rising inflation and increased expenses, however, reforms are needed.