IMF - International Monetary Fund Program Updates

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IMF calls for reduced govt intervention, energy reforms in Pakistan’s economy​


  • Washington-based lender's mission led by Nathan Porter states conclusion of a staff visit to Pakistan from November 12 to 15, 2024

BR Web Desk
November 16, 2024


The International Monetary Fund (IMF) has urged authorities in Islamabad to take steps “to decrease state intervention in the economy and enhance competition” while emphasising the importance of structural energy reforms terming it “critical to restore the sector’s viability”.

“We had constructive discussions with the authorities on their economic policy and reform efforts to reduce vulnerabilities and lay the basis for stronger and sustainable growth,” said Nathan Porter, IMF mission chief, in a statement released by the Washington-based lender on Friday.

“We agreed with the need to continue prudent fiscal and monetary policies, revenue mobilisation from untapped tax bases while transferring greater social and development responsibilities to provinces.

“In addition, structural energy reforms and constructive efforts are critical to restore the sector’s viability, and Pakistan should take steps to decrease state intervention in the economy and enhance competition, which will help foster the development of a dynamic private sector,” Porter was quoted as saying.

The remarks come after the IMF mission led by Nathan Porter concluded a staff visit to Pakistan from November 12 to 15, 2024.

The IMF delegation was in Pakistan to discuss recent developments and the Extended Fund Facility (EFF) programme performance to date.

During the visit, the IMF team met with senior officials from the federal and provincial governments, the State Bank of Pakistan (SBP), as well as representatives from the private sector.

The IMF mission chief noted that strong programme implementation can “create a more prosperous and more inclusive Pakistan, improving living standards for all Pakistanis”.

“We are encouraged by the authorities’ reaffirmed commitment to the economic reforms supported by the 2024 Extended Fund Facility (EFF),” he said, while informing that the next mission associated with the first EFF review is expected in the first quarter of 2025.

On Friday, the visiting IMF team held final meetings with federal and provincial governments’ representatives and asked for meeting the benchmarks and conditionalities for the EFF.

According to a Business Recorder report, Finance Minister Mohammad Aurangzeb also participated in the final round of talks.

The report, while citing its sources, said the IMF team stressed the need to implement tax targets and the National Fiscal Pact.

Sources revealed to Business Recorder that the lender stressed the importance of accelerating tax revenue collection to meet the tax target of Rs12,970 billion for the ongoing financial year. The IMF team also urged for the collection of taxes on agricultural income starting January 2025.

Moreover, the IMF has recommended Pakistan strengthen its capacity at the Finance Division to lead and coordinate macro-fiscal forecasts to support budget preparation, increasing forecast cycles and synchronising them with the budget.

The Fund has also asked Pakistan to initiate legal changes, required to limit the discretionary powers granted to the federal government over the use of supplementary grants, while maintaining some flexibility in budget execution.

Notably, IMF staff visits are standard practice for countries with semi-annual programme reviews and aim to engage with the authorities and other stakeholders on the country’s economic developments and policies and the status of planned reforms.
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It is good that IMF is helping Pakistan liberalize the economy. This should make the country efficient in the long run. Absent IMF, these changes might not have occurred, and the economy would be stuck in the subsidy-distortion-control vicious cycle.
 

Pakistan discusses $7bn bailout reform agenda with IMF in unusual talks​

  • Reforms in taxation, energy sector, privatisation of loss-making SOEs and public finance came under discussion, finance minister says
Reuters
November 17, 2024

ISLAMABAD: Pakistan discussed its $7 billion bailout reform agenda with the International Monetary Fund (IMF) during an unscheduled staff visit last week, Finance Minister Muhammad Aurangzeb said on Sunday, suggesting no new taxes are to be imposed.

The talks in Islamabad came within six weeks of the IMF approving the bailout, an unusual move as it is rare for the fund to discuss reforms ahead of a review of the reform plan under the loan programme.

The first review of Pakistan’s reforms is due in the first quarter of 2025.

“We discussed reforms in taxation, energy sector, privatisation of loss-making state-owned enterprises (SOEs) and public finance,” Aurangzeb said in a recorded video statement broadcast by state-run PTV.

After wrapping up the visit, the IMF had said it was encouraged by Islamabad’s reaffirmed commitment to the economic reforms under the Extended Fund Facility its board had approved in September to reduce vulnerabilities.

The mission did not state the weaknesses, but sources in Pakistan’s finance ministry have said some major lapses prompted the IMF’s visit.
 

Fund visit reaffirms economic reforms and trust​

Afshan Subohi
November 25, 2024


Speculations surrounding the International Monetary Fund (IMF) delegation’s unscheduled three-day visit earlier this month, following the approval of a $7 billion bailout package in late September, were dismissed as baseless by the government and some experts. A corporate platform welcomed the visit, viewing it as a positive signal.

The first formal review of the Extended Fund Facility (EFF) is due in March 2025.

Finance Minister Muhammad Aurangzeb rejected the perception that the IMF’s early visit indicated distrust in the government or discomfort with the pace of agreed reforms and policy decisions.

“There were no specific concerns. It was a routine visit, part of the IMF’s standard practice for countries with active programmes. The mission reviewed updates on benchmarks and key targets,” he clarified in response to a query.

Addressing media reports citing concerns raised by the donor over the Saudi oil facility set to expire by the end of this calendar year. Mr Aurangzeb confirmed,

“We are actively working with Saudi authorities on this matter.” Regarding progress in bridging the $2.5b external financing gap for the current fiscal year, the Finance Minister reas-sured, “Arrangements with bilateral creditors, including the Kingdom of Saudi Arabia, the United Arab Emirates and China, are firmly in place and proceeding smoothly.”

Dr Reza Baqir, former Governor of the State Bank of Pakistan, who worked with the IMF for 18 years, considered the controversy over the IMF staff visit trivial. “To my knowledge, there was nothing unusual about the visit. The IMF previously conducted quarterly reviews, but now follows a semiannual review schedule. Between these reviews, it’s standard practice of the IMF to conduct ‘staff visits’ to monitor progress on meeting conditionalities,” he explained.

We are encouraged by the authorities’ reaffirmed commitment to the economic reforms supported by the 2024 EFF,“ Nathan Porter, the chief of the IMF’s Pakistan mission, who led the talks, said in a statement.

The constructive discussions on eco- t nomic policy and reform efforts to reduce vulnerabilities would help to lay the basis for stronger and sustainable growth, he added.

Prominent business leaders in Pakistan have voiced strong support for the IMF, viewing it not only as a key partner in addressing the country’s external sector crisis but also as an essential source of economic oversight.

Given the weakness of local institutions and the political leadership’s tendency to deviate from sound economic planning and policy under public and special interest pressures, the IMF’s guidance and control are seen as critical for maintaining fiscal discipline and steering economic reforms.

Ehsan Malik, CEO of Pakistan Business Council, highlighted the importance of strengthening ties with the IMF during the current challenging period. “For this pro-gramme to be Pakistan’s last with the IMF, it is essential to ensure that key deliver-ables are met on time. Like any borrower-lender relationship, consistent and effective communication between both sides is crucial,” he emphasised.

“Face-to-face interaction between the IMF team and the Finance Ministry is a positive development, reflecting growing confidence and trust. The IMF’s visil offered a valuable opportunity to discuss strategies for getting tax revenue back or track, to explore plans for restarting priva tisation and to seek reassurance regard ing the fiscal agreement with the provinces,” he noted.

“It is crucial to recognise that, in addi tion to providing financial support, the IMF also offers valuable technical assistance The government would have sharec updates on its ongoing progress in main taining macroeconomic stability Therefore, I view the IMF’s unschedule evaluation as a positive development rather a cause for concern,” Mr Malik emphasised.

According to information gathered from sources who have been part of engagements with the donor, the regular reviews in a programme are part of an agreed-upon timetable to ensure compliance with targets and policies. The unscheduled visits by the IMF staff are uncommon and occur in case of economic shocks leading to significant deviations if evidence of straying from the agreed path surfaces or on clients’ requests to renegotiate terms or seek additional support.

“While the IMF normally sticks to scheduled evaluations to ensure predictability, unscheduled visits are within its mandate if circumstances demand them. These visits are typically focused on addressing immediate concerns rather than routine assessments,” a source remarked.

Earlier last week, Finance Minister Aurangzeb commented on the negotiations with the IMF, noting, “We discussed reforms in taxation, energy sector, privati-sation of loss-making state-owned enterprises and public finance.” This highlights the government’s focus on addressing key structural issues as part of its economic strategy to align with the IMF’s advice for continued financial support.

After concluding the visit, Nathan Porter, head of the IMF’s Pakistan mission, who led the talks, expressed optimism in a statement, saying, “We are encouraged by the authorities’ reaffirmed commitment to the economic reforms supported by the 2024 EFF.” He added, “The talks aimed to reduce vulnerabilities and lay the foundation for stronger and sustainable growth.”

Published in Dawn, The Business and Finance Weekly, November 25th, 2024
 

IMF deal yet to boost foreign loans​

International lenders provide $2.7b in Jul-Oct compared to $5.8b last year

Shahbaz Rana
November 27, 2024

tribune



ISLAMABAD: The International Monetary Fund (IMF) bailout package has not yet instilled confidence among Pakistan's foreign creditors, which disbursed only $2.7 billion in loans during the first four months of the current fiscal year, down by more than half, show official statistics.

The Ministry of Economic Affairs has released the official disbursement data for the July-October period of fiscal year 2024-25, which suggests that foreign financing has not yet been accelerated.

The ministry reported that during the first four months of FY25, the global bilateral and multilateral lenders disbursed less than $1.7 billion, excluding the IMF's first loan tranche.

After adding the IMF installment, the total disbursement reached $2.7 billion compared to $5.8 billion in the same period of last fiscal year, exhibiting a reduction of about $3.1 billion, or 55%.

The government and the central bank separately report the loan release data of the IMF and other bilateral and multilateral creditors.

International creditors are reluctant to extend new budget support financing except for the Asian Development Bank (ADB). Saudi Arabia has not yet approved a $1.2 billion oil facility while project funding is also moving at a snail's pace.

The IMF programme had been expected to unblock other financing lines but due to the low credit rating of Pakistan, coupled with slow movement in different projects, the country is struggling to meet its external financing needs.

The government's decision to slow down the release of development budget due to fiscal constraints has also impacted the disbursement of foreign funding for these schemes.

During unscheduled discussions last week, the IMF pointed out a discrepancy in the external debt disbursement data reported by the Ministry of Economic Affairs and the Debt Management Office of the Ministry of Finance, sources said.

Pakistan has planned to borrow a minimum of $23 billion in this fiscal year, including the rollover of $12.7 billion in bilateral debt, to finance its swelling development programme and meet the nation's external financing requirement.

Out of the borrowing of $23 billion, the government has included $19.2 billion in budget documents. It has not made the rollover of $3 billion by the United Arab Emirates (UAE) and IMF repayments part of federal books as these are meant for balance of payments support.

Pakistan had assured the IMF that China's Exim Bank would roll over $3.4 billion worth of project debt and Saudi Arabia would provide a $1.2 billion oil facility. However, so far there have been no significant developments in both cases, although China has engaged with the government.
 
Data of the Ministry of Economic Affairs showed that the multilateral creditors released $697 million from July to October, which constituted 16% of the annual estimate.

The ADB gave $170 million in four months for multiple schemes compared to the annual estimate of $1.7 billion. The World Bank provided $349 million against the annual estimate of $2 billion. Its funding mainly came for the Sindh Flood Reconstruction Project and the Higher Education Commission development programme.

Meanwhile, Finance Minister Muhammad Aurangzeb on Tuesday met World Bank Country Director Najy Benhassine.
 
The rollover of $5 billion worth of Saudi cash deposit and $4 billion in Chinese cash deposit is also part of the government's plan. The economic affairs ministry reported no progress on those two fronts.

During negotiations with the IMF, the finance minister had stated that the Fund asked Pakistan to secure rollovers for three years. However, the lenders did not agree.

On July 28, after returning from Beijing, Aurangzeb stated, "We are requesting an extension in maturity of the existing cash deposits by three to five years."

Pakistan had taken $5 billion from Saudi Arabia, $4 billion from China and $3 billion from the UAE for one year. However, due to its inability to pay back the loans, the country is securing a one-year extension every time.
 

IMF reveals stringent conditions for second loan tranche​

Finance ministry confirms government must strictly adhere to 22 points to qualify for $1.1 billion instalment

News Desk
December 03, 2024

photo reuters file



Government has initiated a series of tough measures, including asset disclosures by civil servants and their families, to meet the conditions for securing a $1.1 billion tranche from the International Monetary Fund (IMF), Express News reported on Monday.

The approval for the second instalment of the IMF’s Extended Fund Facility (EFF) comes with 39 strict conditions.

These include the mandatory disclosure of assets by civil servants and their families, the elimination of tax amnesties and exemptions, and the issuance of a governance and corruption assessment report.

According to sources, the IMF has set benchmarks that include maintaining foreign exchange reserves equivalent to three months of import bills, achieving fiscal targets, and right-sizing the public finance structure.

Other major reforms mandated by the IMF include keeping the difference between the open market and interbank exchange rates within 1.25%, and ensuring that the State Bank of Pakistan’s foreign exchange reserves reach $8.65 billion by the end of the fiscal year.

The Ministry of Finance confirmed that the government must strictly adhere to 22 points to qualify for the $1.1 billion instalment.

Key among these is the deadline of February 2025 for civil servants to disclose their assets. In addition, the IMF has insisted that no extra grants be provided outside the budget, and it has emphasised fiscal discipline across the board.

The document also highlights the reduction in public sector liabilities, with a cap set on the total outstanding government guarantees at Rs5.6 trillion.

Furthermore, a focus on limiting power sector arrears to Rs417 billion and controlling tax refund backlogs to no more than Rs24 billion is expected to form part of the government's reform agenda.

During a briefing to the National Assembly's Standing Committee on Finance, Finance Minister Muhammad Aurangzeb acknowledged that macroeconomic stability had been achieved over the past 14 months, but emphasised the need to reduce the role of intermediaries in tackling inflation.

He also mentioned that the Economic Coordination Committee (ECC) was devising strategies to review the prices of food items on a monthly basis.

The minister stressed that the current IMF loan agreement would be Pakistan’s last message to the international community, with urgent reforms required in taxation, energy sectors, and population control. He further highlighted rising concerns around climate change, child stunting, and the growing number of children out of school.

Lastly, Aurangzeb noted that Pakistan was in the process of finalising a 10-year partnership framework with the World Bank, which would help bolster the country’s economic stability. He pointed out that improvements in the economy had already resulted in a positive trend in the stock market.
 
Federal Minister for Finance and Revenue Muhammad Aurangzeb Wednesday reaffirmed that Pakistan’s macroeconomic indicators are “moving in the right direction”.

Addressing the ‘International Affordable, Green & Resilient Housing Conference’, organised by the Pakistan Mortgage Refinance Company (PMRC), Aurangzeb highlighted the government’s progress over the past 12 to 14 months.

“We have made good and significant progress, whether it is the reversal of the country’s bane, and both fiscal and current accounts.

“Month after month, we are showing surpluses and leading towards a sustainable point,” said Aurangzeb.

During his address, the minister reiterated that the authorities remain committed to implementing the International Monetary Fund (IMF) programme.
 

Gas, power tariff hikes under IMF fuel inflation: finance minister​


Khaleeq Kiani
December 12, 2024

• Gas prices rose 840pc, electricity by 110pc; rupee fell 43pc since 2019
• Sugar, wheat, palm oil, crude oil prices also saw major increases

ISLAMABAD: The government admitted on Wednesday that a record 840 per cent increase in gas prices, over 110pc rise in electricity tariffs and a 43pc currency depreciation under the International Monetary Fund (IMF) programme have contributed significantly to the unprecedented inflation that has eroded the purchasing power and living standards of many Pakistanis.

“Under the IMF stabilisation programme, the government has increased the long-due utility prices (electricity and gas),” Finance Minister Muhammad Aurangzeb said in a written testimony before the National Assembly on Wednesday.

Giving details in response to a question from another government parliamentarian, Tahira Aurangzeb, the minister said that from November 2023 to February 2024, a major increase in gas and electricity charges had been observed.

Gas tariff rose by 520pc in November 2023 (index increased from 217 to 1,344) and by an additional 319pc in February 2024 (index from 353 to 1,479). Similarly, electricity charges increased by 35pc in November 2023 and another 75pc in February 2024.

Mr Aurangzeb noted that “the unprecedented increase in the price of these items ultimately jacked up the overall inflation in FY2024”.

The finance minister also put on record that inflation measured by the Consumer Price Index (CPI) stood at 8.9pc and 12.2pc in FY21 and FY22, respectively. He also conceded that the increase in CPI more than doubled to 29.2pc in FY23, before declining to 23.4pc in FY24. The inflation in the first five months (July-November) of the current year plunged to 7.9pc, he said.

He said the currency depreciation intensified the inflationary problem, as the exchange rate depreciated by 43.2pc to Rs278.4 per dollar in June 2024 from Rs158.8 per dollar in July 2019.

The minister also counted other reasons for the increase in inflation rates, including a 54pc increase in sugar prices, from $280 per tonne in July 2019 to $430 in June 2024.

Palm oil prices also increased by 61pc during the same period, from $544 to $874 per tonne, while soya bean oil prices went up by 35pc to $1,011 per tonne from $748.

During the same period, wheat prices jumped by 35pc to $265 per tonne from $196.2 while crude oil prices increased by 29pc to $82.6 per tonne.

On top of that, the 2022 floods caused significant damage to the economy, especially the agriculture sector. About 4.5 million acres of crops were damaged, and around one million animals were lost. Total damages and losses amounted to $30.13 billion, of which agriculture suffered $12.9bn (43pc of total damages and losses).

The crop sub-sector contributed to 82pc of the total damage and losses, livestock to 7pc, and fisheries/aquaculture to 1pc. Due to crop damage and supply chain disruption, food inflation surged to 38pc while headline inflation increased by 29.2pc in FY2023.

To control the inflationary pressure, the minister said the Competition Commission was taking measures to control cartelisation and undue profiteering, but he did not mention those measures that could have been noticed by the citizens.

However, he also counted strict action against illegal foreign exchange companies, smuggling, and hoarding in the commodity market, which helped achieve exchange rate stability, market confidence, and a smooth supply of commodities.

The minister said that reductions in energy prices, such as a decline in electricity charges, alongside falling motor fuel prices, significantly eased inflationary pressures on the public and increased allocations of BISP welfare schemes supported the vulnerable. He also noted 10pc reduction in fares announced by Pakistan Railways.

Published in Dawn, December 12th, 2024
 

Editorial: ​

Need for comprehensive reform strategy outside IMF bailout to address structural imbalances​


FINANCE Minister Muhammad Aurangzeb’s comment at an Islamic finance conference that, having effectively addressed its economic woes, the country is on the path to stability and growth, is overly optimistic, if not boastful.

It is true that the country no longer faces the economic emergency of a year ago, when it was on the verge of defaulting. In the past 18 months, two consecutive IMF bailouts worth $10bn, including the ongoing funding programme of $7bn, and rollovers of foreign loans of billions of dollars, have helped reduce economic uncertainty and created some semblance of stability. Market sentiments are also upbeat, as reflected at the bourse, which is breaking record after record, and macroeconomic indicators are improving rapidly.

Yet, the short- to medium-term growth outlook is bleak: the government does not have a credible economic plan that goes beyond IMF-mandated goals and debt rollovers to drive robust growth without pushing the country into yet another balance-of-payments crisis. Apparently, all except our policymakers can see that the IMF programme is needed but is not enough for recovery and growth.

The country needs a comprehensive reform strategy outside the IMF bailout framework to address persisting structural imbalances and pave the way for growth — without triggering another crisis — if it wants to exit the debt trap, alleviate rising poverty, and end soaring unemployment.

Curbing the fiscal deficit, for example, should be on top of the government’s long-term growth agenda. It would involve sincere efforts to bring the untaxed and under-taxed segments into the revenue net, ending exemptions to powerful lobbies and ensuring tax compliance.

Besides, it should focus on slashing wasteful expenditures and accelerating the privatisation process. The other plank of this strategy should be the creation of an environment where businesses are not worried about sudden policy changes or massive regulatory burdens, and where local and foreign investors are treated equally. Private investment is crucial to boosting both industrial and agricultural productivity to increase non-debt-creating export inflows.

However, it should be noted that no economic strategy will work in isolation; plans should be part of an overarching ecosystem where innovation is encouraged, courts are allowed to act independently, and the government invests heavily in education and health to develop human capital that can keep pace with technological advances. But so far, the government has been in firefighting mode, basing all its future economic plans on promised investments from China and Saudi Arabia as well as other Gulf states, without realising that even friends can do only so much.

So long as the government does not realise that it needs to put its own house in order, growth will remain anaemic and the world will be reluctant to help.

Published in Dawn, December 15th, 2024
 

Lack of awareness of IMF conditions​

Anjum Ibrahim
December 16, 2024

Pakistan’s private sector elite in industry and the farm sectors, major non-institutional recipients of budgeted expenditure and an influence behind the continued reliance on indirect taxes as a revenue source (to the tune of 75 to 80 percent), are currently clamouring for change in government policies agreed by the country’s two economic team leaders – Federal Finance Minister Aurangzeb and Governor State Bank of Pakistan Jameel Ahmed - with the International Monetary Fund (IMF) under the ongoing Extended Fund Facility (EFF) programme.

The obvious question is whether the major thrust of this rising clamour for change, in most cases a demand to revert to previous fiscal and monetary incentive packages, is because they are unaware of the agreements signed with the IMF, which as per practice are uploaded on the Fund website. Or perhaps they are unconcerned as previous administrations, barring none, reinstituted pro-private sector elite policies as and when the country either abandoned the Fund programme mid-way as the balance of payments position strengthened or, in a handful of the total of twenty-three previous programmes, reverted to these policies once the programme was completed.

Today, apart from external players, multilaterals/bilaterals, have indicated they will suspend approved programmes until and unless their politically challenging conditions are fully met (a suspension that was implemented in the previous two programmes leading to a cessation of bilateral assistance from the three friendly countries, China, Saudi Arabia and the UAE), there are two major domestic non-institutional players are calling for a change in policies with threats no longer implicit but explicit - the industrial elite, and the agriculture elite.

The elites in industry threaten factory closures, including relocation abroad and a decline in export revenue. They typically exercise influence through their powerful registered associations which legally operate in nearly all large scale manufacturing sectors, including those where collusion should not have been possible as the number of producers is large and the number of consumers even larger.

Their demands for tax concessions, electricity tariffs at par with regional competitors and cheap credit continue to this day though the Fund’s analysis on the subject is impeccable: “The state’s support of businesses through subsidies, favourable taxation arrangements, protection and governmental price setting has undermined the development of a dynamic and outward oriented economy.

Subsidies have taken the form of low-cost financing and other concessions, which, although varied across industries, left financing and taxes net of subsidies more favourable than in peer economies and less-favoured sectors.
 
The tax system has been extensively used to provide non-transparent support through exemptions for privileged sectors like real estate, agriculture, manufacturing, and energy, as well as, through the proliferation of Special Economic Zones.

The government’s intervention in price setting, including for fuel products, power, and gas (biannual), combined with high tariff and non-tariff protection, tilted the playing field in favour of selected groups or sectors. Despite all this support, the business sector has failed to become an engine of growth, and the incentives eventually weakened competition and trapped resources in chronically inefficient (including perpetually “infant” industries.
 
The elites in the agriculture sector, the rich landlords, are another source of power who have effectively negated past attempts to pay income tax at the same rate as their much poorer salaried compatriots and have sought subsidised inputs, including credit, payable by the taxpayers. To protect the poor farmers, the state has resorted to procuring staples as well as setting their prices, and in the event that the support price is not high enough the country has witnessed scenes of farmers participating in debilitating wheel jam strikes.

Here too the Fund has not minced words in dictating its conditions with relevant logic: “Long-standing government interventions in agricultural commodities have created distortions inhibiting the sector’s productivity and harming Pakistan’s medium-term potential.

Government price setting and procurement operations have made the agricultural sector unresponsive to changing consumer preferences, exacerbated price volatility and hoarding, undermined the incentives for innovation, misallocated resources, and placed a burden on fiscal sustainability.

Going forward, these interventions should be discontinued. Any purchases of agricultural commodities by SOEs or provincial food departments should be done solely for purposes of a narrowly defined national food security, and not as quasi-fiscal social policies, including boosting farmers’ income or provide untargeted subsidies for staples.”
 
However, what is baffling is that provincial chief ministers have implemented policies that are in violation of the agreement with the Fund on one count: failing to achieve the agreed provincial surplus. Punjab adjusted its books to show a surplus of 40 billion rupees instead of a deficit of 160 billion rupees only after the visiting Fund team (11 to 15 November 2024) expressed its concerns that the province had not met the target for the first quarter. The other three provinces have yet to show a surplus.

The budgeted provincial surplus is an unrealistic 1,217 billion rupees in the current year (up from 600 billion rupees budgeted last year though only 539 billion rupees was realized) with Punjab’s share at 630 billion rupees, Sindh’s 298 billion rupees, Khyber Pakhtunkhwa’s (KPK’s) 178 billion rupees and Balochistan’s at 110.6 billion rupees.

Punjab Chief Minister announced 400 billion-rupee worth of freebies at the taxpayers’ expense, which are largely untargeted as they are not channelled through the Benazir Income Support Programme (BISP) where beneficiaries have been identified and include:
(i) electricity subsidy for two months (August/September) to those using below 500 units per month (including lower middle to middle income earners) to cost the taxpayers 45 billion rupees; Kissan card for provision of subsidised inputs to farmers, with loans of 150 billion rupees - 30,000 rupees per acre - to be provided to 750,000 small farmers on easy terms – a facility which in the past was hijacked by the rich;
(iii) livestock card envisaging 2.5 lakh rupees interest free loans for animal feed; (iv) free solar modules to households consuming less than 200 units of electricity and those consuming between 200 and 500 units the government will cover 90 percent of the cost;
(v) honahaar scholarship programme and launch of laptop scheme from next month.
 
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