he federal government is expected to present its budget for the fiscal year 2024-25 on June 7. This will be the first budget of the Pakistan Muslim League-Nawaz government after coming into power in the wake of general elections held on February 8.

The significance of this budget cannot be overstated. Pakistan is currently grappling with formidable economic challenges. The country is struggling to meet its balance of payment needs and is negotiating a bailout package with the International Monetary Fund. The new package is essential for stabilising the economy, which is facing a historically low GDP growth of around 3 percent.

Additionally, the policy rate of 22 percent, coupled with stagflation, poses a challenging scenario both for consumers and businesses. Despite the government’s claim of achieving the lowest inflation rate in 23 months, it remains alarmingly high at 17.3 percent.

The upcoming budget is, therefore, critical. It must not only address perpetual economic woes of the masses, traders and the industry, but also show a pathway to sustainable recovery. The government’s focus will likely be on measures to control inflation, stimulate economic growth and provide relief to the common people, while balancing fiscal responsibility with necessary expenditure to support the economy.

Pakistan’s negotiations with the IMF are particularly important in this context. Securing a new long-term extended fund facility (EFF) programme will not only help stabilise the economy but also build investors’ confidence. To secure IMF’s support, the government needs to demonstrate a commitment to introducing economic reforms and prudent fiscal management.

A critical aspect could be the measures announced in the budget for revenue mobilisation. Effective steps in this direction will not only reduce reliance on global lenders like the IMF but also facilitate the initiation of essential infrastructure and social sector development projects. Such an approach could stimulate economic growth, create jobs and improve public services, thereby enhancing overall economic stability.

A daunting........

© The News on Sunday