IMF sees PKR 1.7Tn fiscal adjustment

IMF has projected a steep fiscal adjustment of over PKR 1.7Tn in the next two fiscal years aimed at containing a highly unsustainable public debt at current levels – a path that can address structural economic issues but seems politically unpopular. In its Global Fiscal Monitor report, IMF has projected a sharp increase in revenues but a gradual reduction in expenditures in two years to bring the public debt-to- GDP ratio down to 77.7% or PKR 43Tn by Jun’23 from the current 87.7%. Pakistan’s budget deficit – the gap between expenditures and revenues – will be 7.1% of GDP in FY21.