ISLAMABAD – October 5, 2025: Pakistani officials have apprised the visiting International Monetary Fund (IMF) mission about the heavy flood-related losses and their impact on provincial fiscal performance, urging a review of economic targets tied to the third tranche of the IMF loan.
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Provinces Call for Reassessment of Surplus Targets
During discussions, provincial governments requested the IMF to revise their budget surplus targets, citing that the devastating floods had undermined their fiscal capacity.
For the ongoing fiscal year, provinces were expected to deliver a combined surplus of Rs 1,464 billion, but officials acknowledged that this target has become unrealistic in the aftermath of widespread destruction.
- Punjab was tasked with generating a Rs 740 billion surplus but fell short due to infrastructure damages and revenue disruptions.
- Sindh asked the IMF team to revisit its Rs 370 billion surplus target, pointing to economic setbacks from the floods.
- Khyber Pakhtunkhwa (KP) linked its Rs 220 billion surplus to the federal government’s timely transfer of tax revenues.
- Balochistan was assigned a Rs 150 billion surplus, which also appears unattainable given the scale of flood damages.
IMF Talks and Policy-Level Discussions
Officials stressed that primary budget surplus goals in Punjab, Sindh, and KP have been severely impacted by the natural disaster. The matter will be taken up again during policy-level talks between Pakistani authorities and the IMF mission.
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The outcome of these discussions will be critical in determining whether Pakistan secures flexibility on fiscal targets as it seeks to maintain economic stability while managing disaster recovery.
