The IMF's criticism of Pakistan's reckless budget for the fiscal years 2023 and 2024 poses significant economic risks. Unless the government agrees to review the document and fix its flaws, the June 30 deadline to meet the lender's conditions for funding will likely be missed.



It wouldn't be amazing assuming it does as such, taking into account that it needed to briskly, however thoroughly, amend its financial plan for the active year to oblige the IMF's interests for the resumption of its subsidizing program when Miftah Ismail was in charge of the money service.


Pakistan "cannot accept everything from the IMF," Finance Minister Ishaq Dar told senators yesterday, in response to the Fund's concerns. If the government doesn't complete the deal, then what would happen? In the best-case scenario, Pakistan would have difficulty meeting its $23 billion in external debt obligations during the following fiscal year by seeking bilateral debt relief, obtaining new loans, and rolling over existing loans.


Even if it is able to obtain new loans from friendly nations and concessions from bilateral lenders, it will incur additional economic slowdown, job losses, and higher inflation. The worst-case scenario is Pakistan's debt default, which the government has attempted to prevent by stifling economic expansion.


Moody's also said that Pakistan is getting closer to defaulting because it hasn't started its $6.7 billion IMF bailout program. There are expanding takes a chance with that Pakistan might not be able to finish the IMF program," a Moody's expert was cited as saying. Moody's said that Pakistan could default without an IMF program because of its very low reserves, hours before the IMF made its reservations public on Wednesday night.


The IMF has criticized the budget in a number of ways, including tax amnesty for a money-whitening scheme through remittances, which goes against the program's conditionalities and governance agenda.


Since the majority of financial analysts had ruled out the Fund's approval of the expansionary budget, the criticism was not unexpected. The IMF's resident representative for Pakistan's statement demonstrates that the Fund is still prepared to "work with Pakistan in refining this budget before its passage."


Some say that working with the Fund could give the government another chance to fix its finances so that the review can be finished before the program ends. Obligations on Pakistan's external debt are primarily to blame for the current crisis. As a result, increasing import restrictions has not increased foreign exchange reserves.


The government must be aware that the crisis is being exacerbated by falling reserves, uncertainty regarding the IMF program, and policy inaction. Our debt crisis will only worsen unless the IMF gets on board.