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Pakistan’s recently presented budget has drawn criticism from the IMF. IMF representative for Pakistan, Esther Perez Ruiz said that Pakistan’s tax policies missed “an opportunity to broaden the tax base in a more progressive way”. Furthermore she added that the new tax amnesty “runs against” the IMF program’s “conditionality and governance agenda and creates a damaging precedent”. These comments come amidst Pakistan’s dwindling hopes of securing $1.1bn in funding from the IMF as part of its Extended Fund Facility (EFF) programme which expires in two weeks. Pakistan currently has barely sufficient currency reserves to cover one month’s imports. Nevertheless, the IMF team is willing to work with the government to refine their budget, implying an opportunity for Pakistan to unlock one more IMF board review before their EFF programme terminates.
Pakistan’s dollar bonds are currently trading at distressed levels and have dropped around 5% since last week. Its 8.25% 2024s fell by 4.8% to trade at 55.3 cents on the dollar.