Islamabad: The Finance Ministry announced on Monday that the presentation of Pakistan’s Federal Budget for the fiscal year 2025-26 has been postponed from June 2 to June 10. The delay stems from ongoing disagreements with the International Monetary Fund (IMF) over critical budgetary figures, especially related to subsidy allocations.
During a session of the Sub-Committee of the National Assembly Standing Committee on Commerce, chaired by Khurshid Ahmed Junejo, Joint Secretary (Corporate Finance) Sajjad Azhar detailed the challenges the government faces in reconciling the budget figures with the IMF’s requirements.
Azhar explained that under the IMF’s Extended Fund Facility (EFF), Pakistan is restricted from making changes to allocated budget funds, particularly subsidies, which has caused the delay. “The Finance Ministry’s figures are still under reconciliation with the IMF, resulting in a one-week postponement of the budget announcement,” he said.
The session also focused on the substantial outstanding receivables owed to the Trading Corporation of Pakistan (TCP), amounting to approximately Rs 317.5 billion, including Rs 93.7 billion in principal and Rs 223.8 billion in accrued markup. This issue sparked tension between Sajjad Azhar and TCP Chairman Syed Rafeo Bashir Shah, who defended TCP’s distribution of imported wheat and urea per Economic Coordination Committee (ECC) directives and highlighted delayed payments since 2010.
Azhar countered that the ECC never approved covering the markup costs through the federal budget. He added that the Finance Ministry has held multiple meetings to address the dues and sought the State Bank of Pakistan’s help to negotiate lower markup rates with commercial banks. However, the SBP clarified that since these are commercial agreements, no relief can be extended.
The committee urged the Finance Division to increase subsidy allocations to enable partial payments to TCP. Azhar also shared that the Finance Ministry recently secured commercial loans for Pakistan International Airlines (PIA) without discounts and is exploring similar options to manage circular debt with borrowing costs pegged to KIBOR minus 0.2 percent.
Furthermore, the Punjab government has pledged Rs 26 billion, matched by an equivalent amount from the federal government for the next fiscal year. Another Rs 15 billion will be released on behalf of the Utility Stores Corporation and National Fertilizer Marketing Limited during the current fiscal year, pending ministerial approvals. An additional Rs 30 billion will be included in the upcoming budget.
A representative from NFML confirmed that all dues, including markup, were cleared during the 2023-24 fiscal year.
The panel agreed to release Rs 90 billion of undisputed amounts to TCP in the first phase and to develop a mechanism to resolve markup payments in the second phase. TCP will also conduct a special audit of its commercial loans to identify any discrepancies.
Committee members Shaista Pervaiz Malik and Rana Atif expressed concerns regarding the markup issues and urged a swift resolution of the outstanding payments.
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