He increased the salary of civil servants and military spending by 13% in the new budget that Sharif’s government presented to Parliament. The objectives: growth of 3.5% and inflation “contained” at 21%. The disbursement of the last installment of aid from the International Monetary Fund is crucial, in a country where almost all the income currently goes to cover interest on loans. Meanwhile, Imran Khan is effectively banned from local news.
Islamabad () – A financial maneuver with some subsidies, an increase in civil servants’ salaries and military spending, but without any response to Pakistan’s debt crisis. On the contrary: borrowing another 2.5 trillion rupees (about 8 trillion euros), with the objective (yet to be verified) of containing the debt/GDP ratio at 6.54%. In any case, it is a value well above the 4% that the International Monetary Fund had requested among the conditions to disburse the last installment of the rescue fund that had been assigned to them in 2019.
In Pakistan, where the political crisis is intertwined with the economic one – with the country that, in the shadow of the confrontation around Imran Khan, remains on the verge of default – the presentation of the budget for the fiscal year 2023/2024 was highly anticipated. by the government of Shehbaz Sharif. It was the Finance Minister, Ishaq Dar, who announced the measures that try to combine the impossible: the austerity of the accounts demanded by the IMF and the populist measures of an Executive, in a consensus crisis a few months before the crucial general elections that by law they should be held in November.
Dar presented a budget in which almost all the income will go to cover the interest on the existing debt. He promised not to raise taxes, but at the same time announced a 53% increase in current spending compared to last year’s budget. The measures include 30% increases in the salaries of civil servants and – at a time when the support of the military is crucial – an increase in military spending, which will amount to 13% of the budget. The growth target has been set at 3.5%: last year 5% was indicated, but in reality the country – which also had to deal with the flood disaster this summer – is stuck at 0.3 %. As for inflation, the Sharif government’s goal is to “contain” it at 21%: currently the annual rate is 28.2%, but in May the price increase reached 38%.
Given these figures, the judgment of the International Monetary Fund will be crucial: for Islamabad, it is essential to be able to receive as soon as possible at least part of the 2.3 billion euros that still remain to be disbursed from the rescue fund that it received in 2019 and that expires at the end of this month. Without the disbursement of this aid, default is just around the corner. But it will also be necessary to see at what interest rates Islamabad will be able to obtain the new loans provided for in the maneuver.
Meanwhile, the level of confrontation with Imran Khan and his Pakistan Tehreek-e Insaf party remains high. In recent days, on Thursday, the Islamabad High Court granted bail to the former Pakistani prime minister over a new complaint regarding the murder of a lawyer, Abdul Razzaq Shar, who had accused him of high treason. For its part, the media regulatory authority sent a directive to Pakistani news channels in which, mentioning the clashes on May 9, it intimidated them not to give space in the transmission “to individuals who disseminate hate speech “. Imran Khan was not explicitly mentioned, but for a week he has disappeared from the news.
Photo: Flickr/Peretz Partensk
