The cash-strapped government of Prime Minister Imran Khan last month announced a mega relief package that promises cuts in the prices of petrol and diesel as well as electricity tariff, along with a bonanza of incentives in several sectors of the economy. According to estimates, the subsidy package would cost the exchequer a mammoth $1.5 billion, and the IMF is concerned how a government, already struggling to make ends meet, is going to fund it. Pakistan is still to get half of the $6 billion bailout package from the IMF, and at stake in the immediate term is an amount of around one billion dollars. The global lender’s satisfaction is, therefore, a must for the promised relief to actually reach the masses.
While Finance Minister Shaukat Tarin insists he will manage to convince the IMF, reports say that the plan is to cut the development budget by another Rs100 billion to create space for the PM’s relief package. This would bring the total cut in the PSDP allocation — worth about Rs900 billion at the time of the announcement of the federal budget — to Rs600 billion, as an amount of Rs200 billion has already been slashed under an agreement with the IMF. The fresh cut, meanwhile, is being mulled at a time when the federal ministries are reportedly expecting an additional Rs254 billion for financing the ongoing projects.
A report in this newspaper says that the planning and development ministry has informed the finance minister that a Rs300 billion reduction in the PSDP allocation might result into a situation where the spending orders already issued to the ministries would have to be withdrawn. Not just that, a cut in the development spending is sure to hit the economic growth rate which is already way below what the ruling PTI had inherited from its predecessor, the PML-N, in August 2018. Well, the going is indeed getting tougher!
Published in The Express Tribune, March 21th, 2022.
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