The IMF opposes Govt’s offer to borrow Rs1.25TR to deal with the growing circular debt

• The IMF, Pakistan, which is going to start policy talks from next week.
• Both sides are ready to make basic adjustments to the budgetary framework.
• Changing the revenue targets over macroeconomic numbers.

Islamabad: The International Monetary Fund (IMF) opposed the government’s move to increase the RS1.25 trillion from commercial banks to settle the payment of the circular monster in the energy sector, The news reported on Saturday.

The Washington -based lender has further requested how the Central Power Market (CPPA) would finance interest and capital if the power demand was reduced in the coming years.

The evolution comes as the IMF and Islamabad has repeatedly reiterated to make basic adjustments to the country’s macroeconomic and budgetary framework for the current financial year 2024-25 with upcoming policy talks, which are scheduled to begin on Monday, will complete these adjustments.

Meanwhile, speaking in the publication, top official sources have confirmed that the IMF has not agreed in any move to reduce taxes, in particular the general sales tax (GST) presented by the power address.

The two sides have generally achieved a technical round of talks and now both sides will start policy talks from next week. Policy Parleys will begin on Tuesday and are expected to be completed on Friday.

Both sides discussed the macroeconomic framework on Friday, with the possibility of revising the promotion of real GDP growth and inflation based on the CPC.

The government has predicted a real 3.5% GDP growth rate and inflation based on the ICC at 12.5% ​​for current use.

Following emerging realities on the macroeconomic front, the yield of large -scale construction (LSM) and agricultural sectors remained below the expected levels and now the weight is mainly based on the service sector.

Thus, the actual increase in GDP can be hovering around 1 to 2%. The performance of large crops is expected to be sad and maize production will also remain lower than the desired target. Climate change has negatively affected the performance of the agricultural sector and animals can only play an important role in converting its development into a slightly positive trajectory. If it cannot perform until the desired sign, then agricultural growth may remain negative in current use.

Among the large crops, the production of cotton witness of a large feather. Now all eyes focus on wheat performance, which may remain negative compared to last year’s bumper cultivation. The production of wheat can remain 26.5 to 27 million tonnes. The increase in LSM has been transformed into a negative trajectory, so the service sector will remain the main growth engine for current use.

Concerning inflation based on the CPC, the government envisioned a 12.5% ​​inflation target, who had seen a big dive and reached 1.6% in one month to month. Inflation based on the CPC is expected to be about 6 to 6.5% for current use.

With the ability to revise macroeconomic numbers, it will have a significant impact on the budgetary framework, so that the goals on the revenue side need to be adapted accordingly, taking into account new emerging realities on the macroeconomic fronts.