*Detailed SUMMARY of “Budgeting Austerity” by Editorial, Published in Dawn on May 16, 2025:* The editorial discusses ongoing *IMF-Pakistan* budget talks for the *2025-26 fiscal year* under the *7 billion USD financing facility*, emphasizing the *IMF’s* strict *fiscal policy* demands for debt reduction and sustainability, even amidst the recent *2025 India-Pakistan conflict*. Virtual *technical-level talks* began on *May 14*, with *policy-level discussions* set for *May 19*, outlining targets: *3.6% GDP growth*, *7.7% average inflation*, and *20 trillion PKR* in federal/provincial revenues (*15.2% of GDP*). The *IMF* insists on *austerity*, cutting current and development spending to lower the *budget deficit* from *5.6% to 5.1% of GDP* and boost the *primary surplus* from *1% to 1.6% of GDP*, aiming to reduce the *debt-to-GDP ratio* from *77.6% to 75.6%*. The budget will also integrate *climate initiatives* to access *1.4 billion USD* in *IMF climate funding* over 28 months. Pakistan is meeting current *fiscal targets* with provincial cooperation, but a *revenue shortfall* this year highlights the need to tax *undertaxed sectors* like retail, real estate, and agriculture. Recent moves, such as exiting the *wheat market* and cutting *energy subsidies* for textiles, show *political resolve*. However, the editorial warns that overtaxing *salaried classes* and *corporations* is unsustainable, and reforming the *corrupt tax system* is critical to avoid further cuts to *infrastructure development*, which hampers *economic growth*. *Easy/Short SUMMARY:* The *IMF* demands *austerity* in Pakistan’s *2025-26 budget* under the *7 billion USD facility*, targeting *3.6% growth*, *7.7% inflation*, and *20 trillion PKR* revenue. The *budget deficit* must drop to *5.1%* and *debt-to-GDP* to *75.6%*, with *1.4 billion USD* for *climate funding*. Taxing *retail* and *agriculture* is key, as overtaxing *salaried classes* fails. *Infrastructure cuts* threaten *growth*. *SOLUTIONS of The Problem:* 1. *Broaden Tax Base* Tax *retail*, *real estate*, and *agriculture* with digital tracking to meet *20 trillion PKR* revenue goals. 2. *Reform Tax System* Overhaul *FBR* to curb corruption, using *AI tools* for transparency. 3. *Sustain Austerity* Maintain cuts to *non-essential spending* while protecting *social safety nets* like *BISP*. 4. *Boost Climate Funding* Fast-track *climate projects* to secure *1.4 billion USD* for *water efficiency* and *disaster response*. 5. *Enhance Provincial Role* Strengthen *provincial tax collection* with incentives for compliance. 6. *Reduce Subsidy Leakages* Eliminate *textile* and *elite subsidies*, redirecting funds to *infrastructure*. 7. *Promote Digital Economy* Expand *e-commerce taxation* to capture *untaxed online retail*. 8. *Engage Stakeholders* Consult *businesses* and *rural elites* to ease *wheat market exit* resistance. 9. *Invest in Growth* Prioritize *CPEC Phase II* to offset *development cuts* and spur *3.6% growth*. 10. *Counter Conflict Impact* Secure *IMF flexibility* for *defense spending* post-*2025 conflict* to balance *fiscal targets*. *IMPORTANT Facts and Figures Given in the article:* - *IMF-Pakistan* talks for *2025-26 budget* began *May 14, 2025*, with *policy talks* on *May 19*. - *7 billion USD IMF facility* demands *tight fiscal policy* for *debt sustainability*. - Targets: *3.6% GDP growth*, *7.7% inflation*, *20 trillion PKR* revenue (*15.2% GDP*). - *Budget deficit* to drop from *5.6% to 5.1% of GDP*; *primary surplus* from *1% to 1.6%*. - *Debt-to-GDP ratio* to fall from *77.6% to 75.6%* in *FY26*. - *1.4 billion USD* in *IMF climate funding* over *28 months* for *adaptation* and *mitigation*. - Current *revenue shortfall* requires taxing *retail*, *real estate*, *agriculture*. - Government exited *wheat market* and cut *textile energy subsidies*. *IMPORTANT Facts and Figures out of the article:* - Pakistan’s *2024-25 tax revenue* missed targets by *400 billion PKR*, per *FBR* (April 2025). - *Retail sector* contributes *18% to GDP* but only *4% to taxes*, per *World Bank* (2024). - *Agriculture* (24% of GDP) is *90% untaxed*, per *Pakistan Economic Survey* (2024). - *CPEC* projects worth *6 billion USD* are stalled, impacting *infrastructure*, per *Dawn* (May 2025). - *IMF’s 2023-26 program* approved *3 billion USD* disbursement in *2024*, per *Reuters*. - *India’s Indus Waters Treaty suspension* threatens *80% of Pakistan’s agriculture*, per *UN* (2025). - *Energy subsidies* cost *1.2 trillion PKR* annually, per *Ministry of Finance* (2024). - *BISP* supports *9 million households* but needs *500 billion PKR* more, per *2025 estimates*. *MCQs from the Article:* 1. *What is the IMF’s GDP growth target for Pakistan in FY26?* A. 2.5% *B. 3.6%* C. 4.2% D. 5.1% 2. *What is the proposed budget deficit for FY26?* A. 5.6% *B. 5.1%* C. 6.0% D. 4.5% 3. *How much climate funding will Pakistan receive from the IMF?* A. 1 billion USD *B. 1.4 billion USD* C. 2 billion USD D. 0.8 billion USD 4. *Which sector was recently removed from government intervention?* A. Textile *B. Wheat* C. Real estate D. Retail 5. *What is the IMF’s inflation target for FY26?* A. 6.5% *B. 7.7%* C. 8.2% D. 9.0% *VOCABULARY:* 1. *Austerity* (سختی) – Strict economic policies to reduce spending 2. *Fiscal* (مالیاتی) – Related to government revenue and expenditure 3. *Moribund* (مردہ) – Stagnant or near collapse 4. *Relent* (نرمی کرنا) – Become less strict 5. *Bailouts* (امدادی پیکج) – Financial rescues 6. *Tentative* (عارضی) – Uncertain or provisional 7. *Hefty* (بھاری) – Large or substantial 8. *Primary surplus* (ابتدائی سرپلس) – Revenue exceeding non-interest spending 9. *Benchmark* (معیار) – Standard for comparison 10. *Undertaxed* (کم ٹیکس) – Subject to insufficient taxation 11. *Sustainability* (پائیداری) – Ability to maintain over time 12. *Deficit* (خسارہ) – Shortfall in revenue vs. expenditure 13. *Mitigation* (کمی) – Reduction of severity or impact 14. *Adaptation* (موافقت) – Adjustment to changing conditions 15. *Expenditure* (اخراجات) – Spending or outlay 16. *Revenue* (آمدنی) – Income from taxes or other sources 17. *Elite* (اشرافیہ) – Privileged or powerful group 18. *Corrupt* (بدعنوان) – Dishonest or unethical 19. *Infrastructure* (بنیادی ڈھانچہ) – Basic physical systems 20. *Commitment* (عزم) – Dedication to a cause or policy --- *📢 Attention Please!* We value your engagement with our summaries. Please don’t remove the attribution label. Acknowledging the source respects the effort behind this work. Unauthorized sharing without credit is discouraged. Thanks for your cooperation! 🔍 *⚡ Explore More Summaries, Solutions, and Vocabulary!* 💡 Join our WhatsApp Channel for timely summaries of Dawn articles, solutions, and vocabulary meanings. Click to join: 🔗 [Dawn Article Summaries](https://cssmcqs.com/dawn-editorials-articles-summary-for-students-pdf-download/) *WhatsApp Channel*: [https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y](https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y) Budgeting austerity Editorial Published May 16, 2025 THE initial discussions between the IMF and Pakistan on the upcoming budget suggest that the multilateral agency is not going to relent on the core condition of its current $7bn financing facility: a tight fiscal policy. That was not unexpected. With the country living off repeated bailouts from the lender, it is but natural that its economic policies are tightly tied to the programme goal aimed at ensuring debt reduction and sustainability — in times of war and peace both. Starting Wednesday, the virtual technical-level discussions, which precede formal policy-level talks on the budget from May 19, have revealed tentative fiscal, inflation, growth and other targets that our policymakers will be required to meet next year to stay in the programme. Media reports say that the Fund expects Pakistan’s moribund economy to expand by 3.6pc next year, with headline consumer inflation averaging at 7.7pc, and total federal and provincial tax and non-tax revenues growing to nearly Rs20tr or 15.2pc of the economy’s size. The IMF proposals also emphasise austerity by tightening controls on current and development expenditure to reduce the budget deficit from 5.6pc of the economy’s size estimated for the present fiscal year to 5.1pc next year. Related to this is the hefty increase suggested in primary surplus from 1pc to 1.6pc of GDP in order to ensure sustainable debt servicing and bring down the debt-to-GDP ratio from 77.6pc to 75.6pc in FY26. The next budget will also map climate relevance in adaptation, mitigation and transition to receive the IMF’s climate-related funding of $1.4bn in the next 28 months. Data for the current fiscal year shows that Pakistan is on track to meeting budget targets and other time-bound structural benchmarks agreed with the Fund. Cooperation from the provinces has proved critical in pulling off many of these goals. However, a significant increase in the revenue target proposed for next year amid a shortfall in tax revenues this year underlines the need for broadening the tax base by effectively bringing retail, real estate, agriculture and other undertaxed or untaxed areas of the economy into the net. This demands political commitment and substantial efforts by both the federal and provincial governments. The decision to pull the government out of the wheat market this year despite opposition from the rural elite, and to cut energy subsidies for powerful textile and other manufacturers, shows that the state has what it takes to make tough decisions. The past policy of squeezing the salaried classes and fully documented corporations to collect taxes will not work any longer. Failure to reform the corrupt and inefficient tax system has already taken a huge toll on ordinary people and led to large cuts in spending on the development of infrastructure crucial for future economic growth and stability. Published in Dawn, May 16th, 2025