Pakistan bracing for austere budget under IMF, finance chief says

A Pakistani man counts Pakistan’s rupees at his shop in Karachi on May 16, 2019. (AFP)
Updated 25 May 2019

Pakistan bracing for austere budget under IMF, finance chief says

ISLAMABAD: Pakistan is preparing a belt-tightening budget to tame its fiscal deficit, the de facto finance minister said on Saturday, adding that both civilian and military rulers agreed austerity measures were needed to stabilise the economy.
But Hafeez Shaikh, Prime Minister Imran Khan's top finance adviser, declined to say whether the military's hefty budget would be cut following last week's agreement in principle with the International Monetary Fund for a $6 billion loan.
The IMF has said the primary budget deficit should be trimmed by the equivalent of $5 billion, but previous civilian rulers have rarely dared to trim defence spending for fear of stoking tensions with the military.
Unlike some other civilian leaders in Pakistan's fragile democracy, Khan appears to have good relations with the country's powerful generals.
More than half of state spending currently goes on the military and debt-servicing costs, however, limiting the government's options for reducing expenditure.
"The budget that is coming will have austerity, that means that the government's expenditures will be put at a minimum level," Shaikh told a news conference in the capital Islamabad on Saturday, a few weeks before the budget for the 2019/20 fiscal year ending in June is due to be presented.
"We are all standing together in it whether civilians or our military," said Shaikh, a former finance minister appointed by Khan as part of a wider shake-up of his economic team in the last two months.
In the days since last week's agreement with the IMF, the rupee currency dropped 5% against the dollar and has lost a third of its value in the past year.
Under the IMF's terms, the government is expected to let the rupee fall to help correct an unsustainable current account deficit and cut its debt while trying to expand the tax base in a country where only 1% of people file returns.
Shaikh has been told by the IMF that the primary budget deficit -- excluding interest payments -- should be cut to 0.6% of GDP, implying a $5 billion reduction from the current projection for a deficit of 2.2% of GDP.
The next fiscal year's revenue collection target will be 5.55 trillion rupees ($36.88 billion), Shaikh told the news conference, highlighting the need for tough steps to broaden the tax base.


Al-Qaeda claims Pakistan detained wife of its chief Zawahiri

Updated 23 August 2019

Al-Qaeda claims Pakistan detained wife of its chief Zawahiri

  • Zawahiri, an Egyptian, became leader of Al-Qaeda following the 2011 killing of Osama bin Laden in Abbottabad, Pakistan
  • He is believed to be hiding somewhere in the region

ISLAMABAD: Al-Qaeda has accused Pakistani security forces of detaining the wife of its chief, Ayman Al-Zawahiri, and two other families of the insurgent group’s “martyrs” for nearly a year.
In a statement, the leadership of Al-Qaeda on Friday alleged “treacherous Pakistani forces” captured Zawahiri’s wife and others as they left the former Taliban stronghold of Waziristan bordering Afghanistan about a year ago due to continuous airstrikes.
It said: “We ... hold Pakistan’s government and its treacherous army and their American masters responsible for their criminal acts.”
There was no immediate comment from Pakistan.
Zawahiri, an Egyptian, became leader of Al-Qaeda following the 2011 killing of Osama bin Laden in Abbottabad, Pakistan by US Navy SEALS. He is believed to be hiding somewhere in the region.