By Staff Reporter
ISLAMABAD: Pakistan’s fiscal deficit is expected to exceed the government’s target by more than one percentage point of gross domestic product in the current financial year, the International Monetary Fund (IMF) said on Wednesday.
The IMF projected the gap between the country’s total resources and expenditures at 7.6 percent of GDP for the year ending June 2024, compared with the government’s budgeted target of 6.5 percent.
The estimate assumes that provincial governments will contribute a cash surplus of Rs600 billion to reduce the federal deficit, which is otherwise projected at 7.1 percent of GDP.
The IMF’s forecast, part of its fiscal monitor report, is unchanged from its previous projection made in July under a $3 billion standby arrangement that runs until March next year. The fund expects the fiscal deficit to narrow gradually to 4.4 percent of GDP by 2028, subject to changing economic and political conditions.
The IMF and the Pakistani authorities also differ in their assessments of the primary deficit, which excludes interest payments, for the last fiscal year. The fund estimated the primary deficit at 1.2 percent of GDP, while the government claimed it was 0.5 percent. However, both sides agree on a primary surplus of 0.4 percent of GDP for the current fiscal year.
The fund revised its revenue projections for Pakistan to 12.3 percent of GDP for the current fiscal year, from 12.5 percent in July. It also revised its expenditure estimates to 20.1 percent of GDP, from 19.8 percent. The fund expects revenues to decline slightly and expenditures to fall significantly in the medium term.
The IMF also projected Pakistan’s gross government debt to decline from 76.6 percent of GDP in the last fiscal year to 64.1 percent by 2028, still above the legal limit of 60 percent. The net government debt, which excludes public sector deposits, is expected to fall from 71.6 percent of GDP to 61.8 percent over the same period.
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