Islamabad, Oct 25: Punjab Cash Surplus Deficit Puts IMF Agreement at Serious Risk
After Punjab’s contribution in the first quarter of the current fiscal year fell short of the required Rs. 342 billion cash surplus requirement from its province governments, Pakistan has failed to meet a crucial demand of the International Monetary Fund (IMF).
According to early federal figures, the combined provincial surplus was Rs. 160 billion, representing a 53 percent deficiency of Rs. 182 billion. According to Express Tribune, this has cast doubt on the government’s capacity to adhere to the conditions of its $7 billion IMF Extended Fund Facility (EFF).
Provinces must produce a cash surplus of Rs. 1.217 trillion for the fiscal year, with Rs. 342 billion anticipated for the first quarter, as per the present IMF deal. Punjab’s surplus was greatly impacted by the lowering of its commercial debt on commodities, which caused the cumulative results to fall short of the IMF’s standard.
The provinces did, however, surpass their tax collection goal, collecting Rs. 213 billion from July to September, which is more than the IMF’s aim of Rs. 184 billion.
It would be challenging to meet cash surplus needs given that spending climbed by 33% year over year in the first quarter, mostly as a result of higher current expenses.
According to the most recent IMF staff report, in order to preserve budgetary balance, the federal and provincial governments should strive for more provincial responsibility in controlling spending and tax collection.
