Top global credit rating agency Moody’s reacted to Pakistan’s budget for fiscal year 2024-25, calling it in line with ongoing negotiations with the International Monetary Fund (IMF) for a new Extended Fund Facility (EFF).
Moody’s however cautioned that resurgence of social tensions due to high inflation could hinder the government’s reform efforts.
The agency’s analysis of budget highlighted focus on fiscal consolidation through tax increases and stronger projected nominal growth. It mentioend that budget is likely to support Pakistan’s negotiations with global lender, which are crucial for securing financing from IMF and other partners to meet external financing needs.
It however added that the government’s ability to sustain reform implementation is key to meeting budget targets and unlocking external financing, thereby easing liquidity risks.
Moody’s also sounds alarm about social tensions due to the high cost of living resulting from higher taxes and future adjustments to energy tariffs. The agency highlighted the risks associated with the government’s ability to continually implement difficult reforms, especially considering potential challenges from the coalition government’s electoral mandate.
The federal government unveiled country’s federal budget 2024-25, targeting modest 3.6pc growth for the upcoming fiscal year. This move is aimed at satisfying the IMF and achieving macroeconomic stability. Pakistan is currently in talks with the IMF for a longer and larger programme to ensure permanent stability.
Aurangzeb further indicated that a staff-level agreement with the IMF could be finalized by early July.
https://en.dailypakistan.com.pk/pakistan-budget-2024-25
