According to the Finance Ministery, ahead of the International Monetary Fund’s first quarterly review of a bailout program, Pakistan’s budget deficit rose to the highest in almost three decades.
The deficit increased to 8.9% of the nation’s gross domestic product in the year ended June compared with 6.6% a year earlier, according to provisional numbers released by the Finance Ministry. That’s a big miss for the government, which targeted a narrower 5.6% gap.
Islamabad must also increase government revenue by more than 40% in the fiscal year that began in July, as part of the conditions for a $6 billion loan. Pakistan’s loan from the IMF could be in jeopardy if the trend of the government missing revenue target continues.
“It seems an uphill task,” said one official. “If they’re unable to meet the target for the quarter, then a mini budget to raise taxes is possible in order to clear the next IMF quarterly review.”