INSTANT VIEW-Expert and industry views on Pakistan’s Federal budget for FY24

Pakistan presented its federal budget for the next fiscal year, one of four measures the International Monetary Fund (IMF) will gauge before releasing at least some of the $2.5 billion still pending under a lending programme expiring this month. The cash-strapped country, with reserves to barely meet a month's worth of imports, is undertaking steps to secure a $1.1 billion loan, part of a $6.5 billion IMF bailout package, which has been delayed since November, with more than 100 days gone since the last staff-level mission to Pakistan, the longest such delay since at least 2008.

On Thursday, the resident representative for Pakistan told Reuters that Pakistan needs to restore the proper functioning of the FX market, pass a fiscal year 2024 budget consistent with programme objectives, and secure firm and credible financing commitments to close the $6 billion gap, adding that there was only time for one last IMF board review before the end of the current bailout package. Pakistan is eyeing GDP growth of 3.5%, expecting inflation at 21%, and targeting a fiscal deficit of 6.54% of GDP for the 2023-24 fiscal year, slightly below the current year's revised estimate of 7%.

Experts have mixed reactions on whether the budget will meet IMF requirements and the impact on the economy. COMMENTARY

MUSTAFA PASHA, CHIEF INVESTMENT OFFICER AT LAKSON INVESTMENTS "The budget is unlikely to improve chances of a SLA in June. IMF will likely ask for additional revenue measures of 500-800 billion. Expect a mini budget when a new program is being negotiated."

SHAHBAZ ASHRAF, CHIEF INVESTMENT OFFICER AT FRIM VENTURES "It is surely not a budget that the IMF would approve of. There is no control on fiscal expenditures, while they've announced a dollar amnesty which the IMF doesn't like.

"It is a plain-vanilla budget with no path to structural reforms. There are no new sectors being taxed. There's been a maximum increase in pension and government employees' salaries. 50% or more will go towards interest payment, which is the same old story we've seen over the years. "The increase in super taxes and re-imposition of taxes on bonus tax will not be liked by capital market investors

"Lastly, withholding tax on cash withdrawals is negative for improving financial inclusion. This will increase currency in circulation and grow the cash economy, and also create more upside pressure on inflationary readings" FAHAD RAUF, HEAD OF RESEARCH AT ISMAIL IQBAL SECURITIES

"So far, I don't see any major deviations from the IMF path. This does not seem like an election budget full of populist action other than increasing salaries for government employees. However, will need to see the budget statistics for a test of logic." GOHAR EJAZ, PATRON IN CHIEF, ALL PAKISTAN TEXTILE MILLS ASSOCIATION

"The budget is balance given the current scenario as all IMF conditions being met to revive the programme, especially keeping interest rates positive. "The regional energy price budget, which has built in cross subsidies, general collection and distribution losses is something the export industry cannot sustain."

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