The proposed budget of 18 thousand billion of IMF was presented to the Prime Minister

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The proposed budget of 18 thousand billion of IMF was presented to the Prime Minister
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The proposed budget of 18 thousand billion of IMF was presented to the Prime Minister

Interest rates, which are at a high level of 22 percent, are not in sight to reduce economic growth, sources (Photo: File)

Islamabad: The Ministry of Finance has submitted to Prime Minister Shehbaz Sharif the draft of the new budget proposed by the IMF, in which the size of the budget is proposed to be 18 thousand billion rupees due to the allocation of a record 9 thousand 700 billion rupees for interest payments. That’s a quarter more than this year.

The budget figures are currently provisional due to disagreements over the total amount of interest payments, FBR tax collection and budget surplus targets, as part of efforts to balance expenditure, the Prime Minister was also informed that the Govt. 8 to 10 federal ministries may also have to be abolished.

According to sources, the official announcement is expected during the budget speech of Finance Minister Muhammad Aurangzeb. Sources say that the prime minister has asked the FBR to increase the proposed tax collection target of Rs 12,400 billion. The Prime Minister also emphasized on further increase in the proposed allocation of Rs 1,000 billion for the Public Sector Development Program (PSDP).

The Ministry of Finance told the Prime Minister that due to ongoing discussions with the IMF, the size of the budget, the target of the primary budget surplus and the amount allocated for interest payments are still inconclusive.

Sources say that based on discussions with the IMF, the next year’s budget size may be around 18 thousand billion rupees, which is 24% more than the original budget of this year. But the increase does not reflect the economic ground realities, the Finance Ministry’s hands are tied due to the IMF’s insistence on allocating Rs 9,700 billion for interest payments.

The IMF is not holding back from allocating Rs 9,700 billion for interest payments. This is 33% more than the current year’s budget, the sources further said that the Ministry of Finance has estimated the interest payment in the next financial year from 8 thousand 800 billion to 9 thousand billion rupees. The IMF sees no major reduction in interest rates, which are at a historic high of 22 percent, stifling economic growth.

The Ministry of Defense has asked for 2.25 trillion rupees for defense expenditure, but sources say that the Ministry of Finance has indicated to give 2.1 trillion rupees. This will be about 16% more than the current fiscal year. Due to the Prime Minister’s visit to China from June 4 to 7, the date of presenting the budget in the National Assembly could not be finalized.

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