Pakistan Fails Key IMF Targets

• Pakistan missed 3 of 5 IMF targets, including provincial savings & FBR revenue goals.
• Pakistan achieved a primary budget surplus of PKR 2.4 trillion, exceeding IMF target.
• Despite shortfalls, next $1B IMF tranche likely, due to progress on other benchmarks.

Pakistan has missed three out of the five targets set by the International Monetary Fund (IMF) for the second review of the $7 billion bailout package, according to a report on Wednesday.

According to The Express Tribune report, citing fiscal operations summary released by the Ministry of Finance, the provinces fell short of saving the targeted PKR 1.2 trillion in the last fiscal year, which ended in June, due to a rise in expenditures.

The Federal Board of Revenue (FBR) fell short of meeting two major targets last fiscal year: collecting PKR 12.3 trillion in total revenues and raising PKR 50 billion from retailers under the Tajir Dost Scheme.

Despite these shortfalls, Pakistan achieved a

key milestone by generating a primary budget surplus of PKR 2.4 trillion, supported by revenue contributions from all four provinces.

This marks the second consecutive year of a primary surplus and the highest recorded in 24 years, exceeding the target set by the IMF, added the report.

According to the report, the finance ministry tried hard to stay on the fiscal path, but the setback came from the provincial capitals, which were not under the control of the federal government.

The overall fiscal

deficit also reduced to 5.4 per cent of GDP or PKR 6.2 trillion, which was well below both the original target of 5.9 per cent. The finance secretary kept a tight check on the expenditure throughout the fiscal year.

IMF conditions

The $7 billion IMF bailout package comes with around 50 conditions, some of which are reviewed quarterly and annually, and are directly tied to the disbursement of loan tranches.

While the government has achieved a degree of fiscal stability, official data reveals that net

federal revenues fell short by PKR 1.2 trillion—insufficient to cover just two major expenses: interest payments and defence. The remainder of government spending continues to be financed through additional borrowing.

Despite these challenges, the federal government exceeded its primary surplus target, reporting a surplus of PKR 2.7 trillion—equivalent to 2.4% of GDP—surpassing the IMF’s benchmark, according to the Finance Ministry.

The provincial governments had given the understanding to the IMF and the

federal government to generate PKR 1.2 trillion cash surpluses. However, the four provinces collectively generated a cash surplus of PKR 921 billion, missing the IMF target by PKR 280 billion.

The FBR failed to collect any significant revenue under the Tajir Dost Scheme against the target of PKR 50 billion for the last fiscal year.

Despite these shortfalls, the government is unlikely to face serious hurdles during the upcoming review talks — expected to begin next month — for the release of the next $1 billion tranche, due to

progress on other critical benchmarks, the report said.

The $7 billion package was agreed last year, and it has been instrumental in stabilising the economy of the country.

With inputs from agencies