IMF questions Pakistan's financial decisions amid economic crisis

Pakistan's financial decisions have come under the spotlight as the International Monetary Fund (IMF) questions the government's move to grant financial rewards to all officers of the Prime Minister's office and approve Rs24 billion in supplementary grants during an ongoing economic crisis.

The IMF raised concerns about the source of funding for these decisions, particularly focusing on the Economic Coordination Committee's approvals and the award of honorariums for the PM's Office employees. Despite the IMF's intervention, Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb seem reluctant to reverse the controversial decision.

The Finance Ministry officials defended the decision, stating that reversing it would be demeaning for the prime minister. However, past instances have seen prime ministers altering decisions following IMF objections, as was the case with the Pakistan Democratic Movement government in 2023.

The financial implications of the recent decisions include significant rewards granted to PM's office employees, totaling over Rs51 million. This move comes at a time when Pakistan is facing a substantial fiscal deficit, with the IMF warning about the gap between expenditure and revenues exceeding the approved limit by the National Assembly.

Furthermore, the ECC's approval of Rs24 billion in supplementary grants to clear government liabilities and address budgetary backlogs has also raised eyebrows. The ECC allocated funds for various purposes, including subsidies, loan repayments, and procurement expenses for security forces.

Despite IMF's recommendations to refrain from additional spending to achieve budget surplus targets, Pakistan's fiscal decisions continue to draw scrutiny. The World Bank's recent assessment suggests that Pakistan may struggle to meet key IMF goals by the end of the fiscal year.