The federal government’s budget deficit widened by more than 50%, primarily due to a steep increase in interest payments that reached Rs4.2 trillion during the first half of this fiscal year, casting doubt on the effectiveness of the International Monetary Fund (IMF) programme.
The Rs4.22 trillion interest payments exceeded the net income of the federal government by Rs207 billion during the July-December period of this fiscal year, according to a report released by the Ministry of Finance on Monday.
The fiscal operations report indicates that Pakistan is far from achieving fiscal consolidation despite significantly slowing development expenditures. The root problem of the yawning deficit is now the IMF programme, which also prevents the central bank from lowering interest rates. The high interest rates have failed to curb inflation, remaining in high double digits.
