Washington, 08 May 2025 — The International Monetary Fund (IMF) Executive Board is set to convene tomorrow in Washington, where it is expected to approve a vital $2.3 billion financial assistance package for Pakistan. This development comes after Islamabad demonstrated significant progress in adhering to IMF-prescribed reforms and fiscal targets.
The anticipated financial support comprises a $1 billion disbursement under Pakistan’s existing IMF programme and an additional $1.3 billion in climate financing, which will offer critical support amid ongoing economic challenges.
Government Surpasses Primary Surplus Target
In a report released ahead of the IMF meeting, Pakistan’s Ministry of Finance disclosed performance data for the first nine months (July–March) of the current fiscal year. Notably, the government achieved a primary surplus of Rs3,468 billion, significantly exceeding the IMF’s target of Rs2,700 billion. This surplus, which does not include interest payments, reflects improved fiscal discipline and higher-than-expected contributions from provincial governments.
Overall Fiscal Deficit Reduced
The overall fiscal deficit stood at Rs4,023 billion, but thanks to a provincial surplus of Rs1,053 billion, the effective deficit was reduced to Rs2,970 billion. Among the provinces, Punjab led with a Rs441 billion surplus, followed by Sindh (Rs395 billion), Khyber Pakhtunkhwa (Rs111 billion), and Balochistan (Rs105 billion). The total provincial surplus exceeded the IMF target by Rs25 billion.
Revenue vs. Expenditure Highlights
The federal government’s net income was Rs7,468 billion, while expenditures totalled Rs11,491 billion — reflecting a heavy strain on public finances. A major portion of this pressure is attributed to debt servicing, which surged to Rs6,438 billion, up by Rs921 billion compared to the same period last year.
In contrast, defence spending amounted to Rs1,423 billion, and development allocations were limited to Rs413 billion, showcasing a stark imbalance due to the burden of fixed costs. Other notable expenditures included pension payments (Rs672 billion) and administrative costs (Rs558 billion). The federal government also transferred Rs5,084 billion to provinces from the divisible pool.
Tax Shortfall and Petroleum Levy Boost
The Federal Board of Revenue (FBR) collected Rs8,453 billion in taxes, but this fell short by Rs715 billion compared to the revised target. In contrast, non-tax revenue reached Rs4,099 billion, exceeding expectations by Rs71 billion. The petroleum levy played a major role in this outcome, contributing Rs834 billion.
However, the government’s Trader-Friendly Scheme failed to meet its revenue target, with a shortfall of Rs36.7 billion, according to the Ministry of Finance.
As the IMF meeting approaches, these fiscal metrics will likely influence the final approval of the $2.3 billion package. Approval would not only provide immediate economic relief but also signal international confidence in Pakistan’s financial reform trajectory.
