Pakistan wants the IMF to look over its budget surplus goals.

The second half-year economic review between Pakistan and the International Monetary Fund (IMF) is now in the technical phase, with policy-level talks set for next week.

Officials from both the federal and provincial governments have asked the IMF mission to rethink its budget surplus goals because of the huge losses suffered by the recent floods.

Technical conversations with the IMF are still going on.
Sources said that officials from both the federal and provincial administrations have had in-depth meetings with the IMF team. The important policy-level negotiations about Pakistan’s economic performance will happen next week, even if technical talks are still going on.

Also Read: IMF worried about Pakistan’s unmet goals and reforms

The provincial budget surplus objective of Rs1,464 billion has been asked to be looked at again because it seems impossible to reach because of costs related to the floods. The federation has also asked for a break on the main budget surplus goal of Rs3.1 trillion.

Provinces having trouble with extra commitments
Sources said that last fiscal year, provinces had already fallen short of their agreed surplus objective by Rs280 billion. Floods have made things worse in many provinces this year.

Punjab, which has had the worst flood-related losses this year, is worried that it won’t be able to reach its goal of a Rs740 billion surplus. Sources say that Punjab has not yet made any final decisions in the talks that are still going on.

Sindh has officially asked the IMF to look over its Rs370 billion surplus goal because of costs related to disasters.

Khyber Pakhtunkhwa (KP) has said that it will only get the Rs220 billion surplus it promised if it gets all of its transfers from the federal government.

Balochistan has promised a surplus of more over Rs150 billion, but insiders say the province may also have trouble reaching its goal.

Discussions about policy to decide what to do next
Sources say that none of the three main provinces—Punjab, Sindh, and KP—will be able to reach the primary surplus because of the extent of the flood devastation. The issue will be officially talked about at the policy-level talks next week, where IMF officials and the government are scheduled to talk about changes to the budgetary framework.

The IMF is worried about Pakistan’s reforms and goals that haven’t been met.
Officials in Islamabad said the talks were “positive and constructive,” but the IMF delegation has raised concerns about missed reform promises and goals, as well as delays in passing new laws.

IMF points out that reform goals were not met
The Memorandum of Economic and Financial Policies said that by June of this year, Pakistan had to change laws in at least 10 government entities. The IMF, on the other hand, missed the deadline and wants an explanation.

Also Read: Provinces brief IMF mission on flood damages; Punjab to report tomorrow

The Ministry of IT, Commerce, Maritime Affairs, Railways, and Water Resources needs important laws that are still being worked on. Laws that are not fully finished are:

The Port Qasim Authority Act and the Gwadar Port Ordinance

Amendment to the Karachi Port Trust Act of 1980 not finished

Pakistan Telecom Reorganization Act (draft not shared)

Order to Nationalize State Life Insurance (still being looked at)

Changes to the WAPDA Act have been put off.

Pakistan Railways Act of 1890 (still being discussed)

Exim Bank Act (draft prepared but pending approval)

Amendment to the National Bank Act linked to the Sovereign Wealth Fund Act

IMF pushes for stronger export financing
Beyond legal reforms, the IMF also emphasized strengthening trade and export financing schemes to boost Pakistan’s foreign trade performance. The mission highlighted the importance of improving credit flows and supporting priority sectors.

Also Read: IMF concerned over Pakistan missing Rs12.97tr tax collection target

Officials briefed the IMF about ongoing measures, including plans for the early operationalization of Exim Bank to support exporters.

Govt calls talks ‘constructive’
Despite IMF concerns, the Ministry of Finance has termed the discussions constructive and expressed confidence in progress. Officials maintain that Pakistan remains committed to implementing reforms and addressing gaps identified by the IMF.