IMF projects 2.1pc increase in govt expenditure

ISLAMABAD: The International Monetary Fund (IMF) has projected a significant increase of 2.1 percent in the government expenditure for Pakistan from 19.3 percent of gross domestic product (GDP) in 2024 to 21.4 percent in 2025.

According to the IMF report, “Fiscal Monitor, Putting a Lid on Public Debt”, the government gross debt for Pakistan is projected to increase from 69.2 percent of GDP in 2024 to 71.4per cent in 2025.

The Fund has projected an increase in the net debt for Pakistan from 63.5per cent of the GDP in 2024 to 65.6per cent in 2025.

IMF projects 3.2pc growth

The government revenue is projected at 15.4per cent of GDP for 2025 and 15per cent for 2026 against 12.6per cent during the same period of 2024 and 11.5 per cent in 2023.

The Fund has projected government primary balance at 2.1per cent for 2025 against 0.9per cent in 2024.

The World Bank has stated that the primary balance is expected to record asurplus of 0.7 per cent of GDP in fiscal year 2025, primarily due to the projected windfall from theexceptionally high central bank dividends.

These dividends represent one-time gains fromelevated policy rates in fiscal year 2024 and will be allocated to the Government as non-tax revenuein fiscal year 2025. The primary balance is projected to turn into a deficit of 0.2 per cent of GDP in fiscal year 2026, the Bank added.

Further the government overall balance is projected at -6 per cent for 2025 against -6.7per cent in 2024.

According to the report the country’s debt to average maturity in 2024 is estimated at 18.8per cent of GDP. There would be total gross financing need of about 22per cent of GDP in 2024. Gross financing need is defined as the projected overall deficit and maturing government debt in 2024.

The projected interest rate – growth differential 2024-29 is -3.6per cent while the nonresident holding of general government debt, 2022 is projected at 31.7per cent of total.

Copyright Business Recorder, 2024