ISLAMABAD: The economic team of the federal government has informed the IMF that it will not be able to meet the critical provincial budget surplus target for the current fiscal year due to the devastating floods caused by recent climate events.
According to credible sources, during technical-level talks between the IMF mission and provincial authorities, provincial representatives highlighted that severe flooding in 2025 has significantly impacted the economy, infrastructure, and livelihoods across Punjab, Khyber Pakhtunkhwa, Sindh, Gilgit-Baltistan, and Azad Jammu and Kashmir.
Under the MEFP, a signed agreements with IMF, the provinces were expected to contribute a combined budget surplus of PKR 1,464 billion in the current fiscal year.
However, Punjab, which was assigned the highest target of approximately PKR 740 billion, has stated that it will be unable to meet this goal due to extensive flood-related losses.
Similarly, the Sindh govt has also requested a revision of its budget surplus target of around PKR 370 billion, while Khyber Pakhtunkhwa has linked its PKR 220 billion surplus target to timely federal transfers. Balochistan’s target stands at over PKR 150 billion. delegation from KP informed the IMF mission that flood damages in the province alone are estimated at PKR 30–40 billion.
They emphasized that achieving the surplus is conditional upon timely revenue transfers and disbursements from the federal government.
IMF team appreciated KP’s performance in the previous fiscal year but reiterated the need to meet the current year’s surplus target. Sindh’s representatives also urged the IMF to consider the unexpected financial burden caused by natural disasters and called for flexibility in the agreed benchmarks. IMF mission acknowledged the concerns but did not immediately commit to revising the targets.
All these matters will now be discussed in policy-level negotiations scheduled to begin next week. In light of the crisis, the federal government has reached out to global financial institutions including the World Bank, Asian Development Bank, European Union, and UNDP seeking technical support for conducting a Post-Disaster Needs Assessment (PDNA) to ascertain the full extent of economic losses. these issues, along with the revised fiscal expectations, will form part of the upcoming high-level discussions as the IMF prepares its final report for headquarters.
