ISLAMABAD: International Monetary Fund (IMF) Pusheed Pakistan on Fiscal Targets, Energy Reforms Amid Ongoing Economic Talks, Provincial surpluses, circular debt, and tax revenue shortfalls under scrutiny.
Ongoing mid-year review discussions between Pakistan and the International Monetary Fund (IMF) have spotlighted critical fiscal and structural concerns, with the international lender urging immediate corrective measures in budget management and the energy sector.
The IMF expressed concern over a significant shortfall in provincial budget surpluses. Against a target of Rs1,200 billion, actual figures reached only Rs921 billion. The breakdown shows Punjab contributing Rs348 billion, Sindh Rs283 billion, Khyber Pakhtunkhwa Rs176 billion, and Balochistan Rs114 billion. The IMF has requested detailed justifications from provincial authorities, with Khyber Pakhtunkhwa scheduled to present its case separately on September 29 and October 1.
A central area of focus remains Pakistan’s struggling energy sector. The IMF has demanded a robust strategy to curb power theft, reduce technical losses, and address the mounting circular debt. In response, officials from the Power Division outlined a financial framework involving a Rs1,225 billion loan package designed to resolve circular debt issues over a six-year period.
To fund repayments, the government emphasized the continued application of a Rs3.23 per unit electricity surcharge, asserting that no additional financial burden would be shifted to consumers. The authorities also noted a decline in outstanding loans to Rs397 billion, a substantial improvement from the previously reported Rs635 billion.
The energy reform plan includes restructuring legacy loans amounting to Rs660 billion and securing Rs565 billion in new financing. Talks with Independent Power Producers (IPPs) are ongoing, with excess generation capacity expected to be channeled toward industrial usage and potentially crypto mining ventures.
The IMF has also stressed the need to accelerate governance reforms in electricity distribution companies (DISCOs). Pakistani officials confirmed that three profitable units are on track for privatization, while plans are underway to hand over unprofitable firms to private management within the next few months.
In parallel, the IMF examined Pakistan’s fiscal revenue performance. The Federal Board of Revenue (FBR) reported tax collections of Rs11.74 trillion for the last fiscal year falling short of the Rs12.97 trillion target. Officials attributed the gap to factors including subdued economic activity, flood-related disruptions, and over Rs250 billion in unresolved tax litigation.
Despite the revenue shortfall, the government achieved a primary surplus of Rs2.4 trillion, marking a 24-year high, and kept the fiscal deficit limited to 5.4% of GDP. Furthermore, the number of income tax filers rose from 7 million to 7.7 million, reflecting broader efforts to expand the tax base.
