Funding expectations.

THOUGH still one step short of a staff-level agreement, the deal reached between the government and the IMF, after weeks of painful negotiations, has brought the country closer to the revival of the stalled $6bn Fund programme and, with it, financing from other multilateral and bilateral lenders to fund projected payments of up to $40bn in the next fiscal. It should also settle the wave of uncertainty that has taken over the economy and investors due to the delay in coming to an agreement.

There have been conditions, of course: the government has consented to impose additional taxes of Rs436bn, gradually implement a petroleum levy of up to Rs50 a litre, besides rolling back some fiscally irresponsible measures proposed in the original budget 2022-23.

The changes in the proposed budget to be passed by parliament will help the government target the primary budget surplus of Rs152bn and overall fiscal deficit of 4.9pc of GDP. That makes the FBR's job a little more challenging, with its enhanced tax collection target of Rs7.4tr requiring a growth of 24pc. Any shortfall would force the government to cut down on its essential expenditure to stay the course.

On its part, the IMF has stepped back from its demand to impose a petroleum levy of Rs30 a litre in one go and has foregone 10.7pc sales tax on petrol and diesel.

Once the 'prior actions' are executed through changes in the proposed budget, and monetary targets finalised with the State Bank, the staff-level agreement will be approved by the IMF and the nearly $1bn stuck-up tranche released.

Read: Possible IMF deal still weeks away, says Tarin

Pakistani authorities hope the Fund will...