Islamabad( The COW News Digital) The International Monetary Fund (IMF) is prepared to allow Pakistan a budgetary adjustment of nearly Rs500 billion to address the impact of recent floods, without compromising on the country’s broader fiscal discipline targets. The development emerged during talks between IMF officials and federal and provincial authorities.
According to government sources, Islamabad had formally sought relief from strict primary budget surplus and cash surplus targets in order to fund urgent flood recovery efforts. While the IMF has not agreed to revise these fiscal goals, it is open to adjustments within the existing budget framework to accommodate emergency spending.
Punjab, the province most severely affected by the floods, has pledged to contribute Rs740 billion in cash surplus — provided the Federal Board of Revenue (FBR) achieves its ambitious revenue collection target of Rs14.1 trillion. Despite this commitment, Punjab officials acknowledged that the province is still struggling to create fiscal space to finance rehabilitation measures for flood victims.
Sources revealed that the floods have created a minimum financial impact of Rs500 billion in terms of reduced revenues and increased expenditures. The IMF has indicated willingness to allow for this adjustment, suggesting the federal government offset the impact by cutting development spending by Rs300 billion and drawing an additional Rs150 billion from the contingency pool reserved for emergencies.
The IMF also estimates that provincial expenditures could rise by Rs150 billion due to flood-related costs. Punjab Information Minister Azma Bukhari reaffirmed the province’s determination to deliver on its pledged surplus, noting that Punjab has not claimed any “additional achievement” of Rs740 billion but rather remains committed to the target under the program. She emphasized that Punjab’s contribution is critical for enabling the federal government to demonstrate its capacity to meet primary surplus targets under the IMF program.
The provincial government has also expressed confidence that the FBR will recover its revenue shortfall in the coming months. However, officials noted that last fiscal year the government had been forced to increase petroleum levy rates to offset missed revenue targets, with Punjab alone bearing losses of nearly Rs500 billion due to FBR shortfalls.
While the IMF’s conditional approval provides some relief, federal officials caution that such budget adjustments could limit the central government’s fiscal maneuverability, potentially constraining its ability to respond to other economic pressures.
