Seeking final approval for an International Monetary Fund bailout, the government had already prepared the ground for widespread belt-tightening. But the goals unveiled by Revenue Minister Hammad Azhar for the fiscal year to June 2020 underlined the scale of the economic challenges it faces.
He forecast a budget deficit of 7.1% of the gross domestic product after the gap in the current year blew out to 7.2%.
He also targeted federal tax revenues of 5.55 trillion rupees ($36.80 billion), up 25% and driven by a lower introductory threshold for income tax and a clampdown on tax evasion.
The government failed to hit the last fiscal year’s goal of 4.44 trillion rupees. “Until we improve our tax system, Pakistan will not progress,” Azhar said.
Spending is set to rise to 7.02 trillion rupees, 30% above last year’s target, he said.
Amid chaotic scenes in parliament, opposition lawmakers brandished banners reading “Say no to IMF budget!” and shouting slogans against the government.
Prime Minister Imran Khan’s administration has been forced to seek what would be Pakistan’s 13th IMF bailout since the late 1980s to stabilize an economy that has seen growth plunge while teetering on the verge of a balance of payments crisis.
The rupee has lost about a third of its value this year and inflation has jumped above 9%.
In April, the government secured a provisional $6 billion IMF loan, but it is contingent on measures being taken to cut a budget gap that the Fund forecast at 7% in 2018/19.