Pakistan proposes 3.5% GDP growth, 21% inflation for FY2023-24 budget

Pakistan proposes 3.5% GDP growth, 21% inflation for FY2023-24 budget - source

2023-06-06 20:56

By Asif Shahzad ISLAMABAD (Reuters) -Pakistan has proposed a GDP growth target of 3.5% with a 21% inflation projection in

By Asif Shahzad

ISLAMABAD (Reuters) -Pakistan has proposed a GDP growth target of 3.5% with a 21% inflation projection in estimates for its budget for the 2023-24 financial year, an official source told Reuters on Tuesday.

Prime Minister Shehbaz Sharif's government is set to present the annual budget on Friday, at a time when the South Asian country faces its worst economic crisis with months of delay in securing funding from the International Monetary Fund (IMF).

Pakistan, which is also in political turmoil, has been caught up for months in an acute balance of payments crisis, with its central bank's foreign exchange reserves dipping to as low as to cover hardly a month of controlled imports.

The numbers have been shared in meetings ahead of the budget announcement, which could see changes in reviews in the lead-up to the presentation by Finance Minister Ishaq Dar in parliament, the source added.

The total outlay of the budget, or total spending, is expected to be 14.5 trillion Pakistani rupees ($50.70 billion), said the source who is privy to the budget planning exercise. He added that the proposals also included a fiscal deficit target of 7.7% of GDP and a revenue collection target of 9.2 trillion Pakistani rupees ($32.17 billion).

Sharif is chairing a meeting of the National Economic Council on Tuesday to review the numbers, his office said in a statement.

The budget is being keenly watched as the government is caught between a painful fiscal adjustment reforms agenda set by the IMF, and to make room for any relief to the people ahead of a national election scheduled in early November.

For the outgoing fiscal year 2022-23, which ends on June 30, the country's GDP growth fell to 0.29% against last year's annual budget target of 5%, and a revised projection of 2% by the central bank.

Inflation posted at 38% in May is the highest in Asia.

The IMF's $1.1 billion funding, stalled since November, is critical for Pakistan to unlock other bilateral and multilateral financing to avert a debt default.

($1 = 286.0000 Pakistani rupees)

(Reporting by Asif Shahzad; Writing by Giban Peshimam; editing by Sudipto Ganguly and Ed Osmond)