Gibran Naiyar Peshimam and Asif Shahzad

ISLAMABAD, (Reuters) – Pakistan’s government will present a budget in 2022-23 for fiscal year 2023-23 Friday. This is a plan to tighten fiscal consolidation to try to persuade the International Monetary Fund to provide much-needed bailout funds for cash-strapped countries.

This budget targets an increase of 5% in gross domestic product (GDP), for fiscal year ending June 2023. It comes just a day after government releases its FY2021-22 economic survey.

Although it reported a 5.97% growth rate for fiscal year 2018, the 220-million strong South Asian nation is in a serious balance of payments crisis. The currency reserves fell to $9.2Billion, which is not sufficient for imports for 45 days. While the current account deficit continues to grow, the fiscal deficit remains at historical levels. Inflation is at double the rate and the currency is weakening.

The report stated that “Though (COVID-19), the economy has recovered,… the high growth rate (for the most recent fiscal year) is not sustainable and has caused financial and macroeconomic imbalances.”

Officials from Pakistan and the IMF met last month to discuss their bailout programmes.

The Fund is not sure when it will consider clearing more than $900million of the recent tranche of Pakistan’s $6 billion-administered, 39-month program.

The government has taken one of these key measures, the removal of expensive fuel subsidies. Fuel prices have been raised by 40%.

Former emerging market strategist, at Citigroup (NYSE:) Yousuf Nazar told Reuters.

He stated that the budget would set “a hard path for the next couple of years marked by higher inflation and lower investments as well as increasing unemployment because the government will attempt to implement IMF programmes.”