ISLAMABAD: The federal government has urged provincial administrations to expedite efforts in addressing pending issues related to the International Monetary Fund (IMF) programme, aiming to facilitate the smooth completion of ongoing negotiations for the second review of the $7 billion Extended Fund Facility (EFF) by the weekend.
According to informed sources, the Prime Minister’s Office (PMO) contacted federal officers stationed in provincial capitals on Sunday night, directing them to assist in resolving delays and ensuring that upcoming IMF targets — under both the EFF and the $1.4 billion climate-related Resilience and Sustainability Facility (RSF) — are achieved without further setbacks. Similar directives were issued to relevant federal ministries to enhance coordination and compliance.
Provincial chief secretaries and finance secretaries have been instructed to submit implementation updates within 24 hours, with clear explanations for any unmet goals.
The Ministry of Finance reportedly informed the PMO that larger provinces, particularly Sindh and Punjab, have been less cooperative in meeting IMF-related commitments. Both provinces failed to meet cash surplus targets for the fiscal year ending June 30 and are exhibiting signs of fiscal lapses in the current year.
Sindh has announced a deficit budget of Rs40 billion, while Punjab has expressed reservations over the IMF’s strict conditions, citing concerns over autonomy and dignity, even in the context of flood relief assistance.
The IMF has reportedly directed authorities to suspend disbursements for flood-related development projects until verified loss assessments are completed. It also emphasized the need for fiscal prudence and adherence to agreed budget surpluses.
Under the national fiscal pact, Punjab must provide Rs740 billion cash surplus to the Centre, Sindh Rs370 billion, Khyber Pakhtunkhwa Rs220 billion, and Balochistan Rs185 billion for FY26.
Meanwhile, the IMF and federal government are discussing revisions to macroeconomic projections due to flood damages, which could reduce GDP growth from 4.2% to around 3.5% and raise inflation above 8%, impacting revenue, trade, and fiscal balance.
Additionally, provinces are lagging behind in implementing key structural reforms, including harmonizing agricultural income tax with federal policies, transitioning to a negative list-based GST on services, and modernizing property taxation.
Several commitments under the RSF — such as enhancing water management, disaster response, and financial transparency — also remain pending, particularly in Sindh and Punjab.
All provinces had pledged not to adopt policies contrary to the commitments outlined in Pakistan’s agreement with the IMF, reaffirming that any policy change affecting the programme must first be reviewed by the federal Ministry of Finance and the IMF.
