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As a stepping stone for the IMF program, the tough and unpopular budget: Abdul Rahman

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8 months ago

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After meeting all of the criteria set out by the lender in its annual budget, Pakistan is aiming to secure a staff-level agreement on an IMF rescue of over $6 billion this month, according to Reuters, who spoke with the country’s junior finance minister.

In an effort to secure a loan from the International Monetary Fund (IMF) and prevent another economic collapse, the South Asian nation has set ambitious revenue objectives in its yearly budget, despite growing domestic unrest over new taxing policies.

Minister of State for Finance, Revenue and Power Ali Pervaiz Malik stated on Wednesday that the goal is to reach an agreement at the staff level before the IMF board takes a break, adding that they want to conclude the process within the next three to four weeks.

Regarding the package’s size, he stated, “I think it will be north of $6 billion,” though he stressed that the main focus right now was on the IMF’s accreditation.

With a fiscal deficit that dropped sharply to 5.9 percent of GDP from 7.4 percent the year before, Pakistan aimed for tax collection of 13 trillion rupees ($47 billion) for the fiscal year that started on July 1, a near-40 percent increase from the next year.

The goal of implementing a harsh and unpopular budget, according to Malik, was to pave the way for an IMF program, and the lender was pleased with the revenue measures implemented after their discussions.

Consumers hit hard by food export surge, trade imbalance in Pakistan falls 12.3 percent

“There are no major issues left to address, now that all major prior actions have been met, the budget being one of them,” added Malik.

The budget might get the go light from the IMF, but experts say it might make the public even more furious.

“Obviously they (budget reforms) are burdensome for the local economy but the IMF programme is all about stabilisation,” Malik pointed out.

Given Pakistan’s impending debt repayments and the aftermath of the unwinding of capital and import restrictions, economist Sakib Sherani of private firm Macro Economic Insights warned that the country’s currency and foreign exchange reserves would be under pressure unless the IMF and Pakistan reached a swift agreement.

“If it takes longer, then the central bank may be forced to temporarily re-instate import and capital controls,” he added. “There will be a period of uncertainty, and one casualty is likely to be the rally in equities.”

The benchmark share index of Pakistan climbed 1% during trading on Wednesday, hitting an intraday high of 80,348 points at 0640 GMT, a new record.

With persistent hope for a rescue package from the International Monetary Fund to support the faltering economy, the index has risen by about 10% since the budget was unveiled on June 12.

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The total amount of Pakistan’s liquid foreign reserves is $15.95 billion.

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As of February 14, Pakistan’s total liquid foreign reserves were $15,947.9 million, with the State Bank of Pakistan’s (SBP) holdings being $11,201.5 million.

Official figures for the week ending February 14, 2025, show that the central bank’s liquid foreign exchange reserves rose by $35 million to $11,201.5 million.

Commercial banks maintained net foreign reserves of $4,746.4 million during the period under review, according to the breakdown of foreign reserves.

The nation’s total liquid foreign reserves as of the week ending February 07, 2025, were $15,862.6 million.

Of these, the central bank held $11,166.6 million in foreign reserves, while commercial banks kept $4,696 million in net reserves.

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In January 2025, RDA inflows reach 9.564 billion USD.

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Remittances under the Roshan Digital Account (RDA) increased from US $9.342 billion at the end of 2024 to US $9.564 billion by the end of January 2025.

The most recent data issued by the State Bank of Pakistan (SBP) revealed that remittance inflows in January totaled US$222 million, compared to US$203 million in December and US$186 million in November 2024.

Millions of Non-Resident Pakistanis (NRPs), including those who own a Non-Resident Pakistan Origin Card (POC), desire to engage in banking, payment, and investing activities in Pakistan using these accounts, which offer cutting-edge banking options.

Nearly 778,697 accounts were registered under the scheme by the end of January 2025, according to the data.

By the end of January, foreign-born Pakistanis had contributed US $59 million to Roshan Equity Investment, US $479 million to Naya Pakistan Certificates, and US $799 to Naya Pakistan Islamic Certificates.

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FBR lowers Karachi’s built-up structure property valuation rates

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A year-by-year breakdown of the depreciation value of residential and commercial built-up properties is included in the updated property valuation rates for Karachi that the FBR has announced.

The notification said that built-up structural values on residential property will be gradually reduced.

A residential home’s built-up structure, which is five to ten years old, will lose five percent of its worth.

In a similar vein, constructions between the ages of 10 and 15 will lose 7.5% of their value, while those between the ages of 15 and 25 would lose 10%. Built-up structures that are more than 25 years old will be valued similarly to an open plot.

Furthermore, age will also be used to lower the valuation of built-up properties, such as apartments and flats.

Structures that are five to ten years old will depreciate by ten percent, while those that are ten to twenty years old will depreciate by twenty percent. A 30% depreciation will be applied to properties that are 20 to 30 years old, while a 50% reduction will be applied to those that are above 30 years old.

In terms of commercial built-up properties, buildings that are 10 to 15 years old will lose 5% of their value, while those that are 15 to 25 years old will lose 8%. The value of properties that are more than 25 years old will drop by 10%.

In contrast, there would be a 15% boost in the value of commercial properties in the Defence Housing Authority (DHA) that face any Khayaban.

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