Pakistan tells IMF it can’t meet budget surplus targets

ISLAMABAD: Pakistan’s federal economic team has informed the International Monetary Fund (IMF) that the country will not be able to meet its provincial budget surplus targets for the current fiscal year, citing the devastating impact of recent floods across multiple regions.

According to official sources, during technical-level discussions between the IMF mission and provincial officials, representatives from Punjab, Sindh, Khyber Pakhtunkhwa (KP), Gilgit-Baltistan, and Azad Jammu and Kashmir explained that the severe flooding in 2025 has caused extensive damage to infrastructure, agriculture, and local economies.

Under the Memorandum on Economic and Financial Policies (MEFP), Pakistan had committed to generating a combined provincial budget surplus of PKR 1,464 billion this fiscal year.

However, Punjab, which carried the largest target of PKR 740 billion, has said it will not be able to meet this goal due to heavy flood-related losses. Similarly, Sindh has requested a revision of its PKR 370 billion target, while KP linked its PKR 220 billion surplus to timely federal transfers. Balochistan’s target remains at over PKR 150 billion.

The KP delegation told the IMF that flood-related damages in the province alone were estimated between PKR 30–40 billion, emphasizing that achieving the surplus depends on timely disbursements from the federal government.

The IMF mission acknowledged the concerns but did not commit to revising the agreed fiscal targets. Meanwhile, Sindh’s representatives urged the IMF to consider the unexpected financial strain caused by natural disasters and sought flexibility in the program benchmarks.

These matters will now be discussed in policy-level negotiations next week, as the federal government engages with global financial institutions including the World Bank, Asian Development Bank, European Union, and UNDP to launch a Post-Disaster Needs Assessment (PDNA) to assess total economic losses.