Islamabad is holding its second half-yearly economic review talks with the IMF. The global lender is pressing Pakistan to explain the fall in provincial budget surpluses. It is also demanding urgent steps to end circular debt in the energy sector.
According to sources, the IMF asked provincial governments to justify why their combined surplus reached only Rs921 billion, below the Rs1,200 billion target. Punjab posted Rs348 billion, Sindh Rs283 billion, Khyber Pakhtunkhwa Rs176 billion, and Balochistan Rs114 billion. Khyber Pakhtunkhwa will brief the IMF separately on September 29 and October 1.
The IMF also highlighted issues in Pakistan’s energy sector. It called for a concrete plan to reduce line losses and power theft. Officials shared that a Rs1,225 billion loan agreement with banks aims to eliminate circular debt over six years. The payments will come from an existing Rs3.23 per unit surcharge, avoiding extra costs for consumers. Loans have decreased to Rs397 billion from the previous estimate of Rs635 billion. The plan includes restructuring Rs660 billion in old loans and adding Rs565 billion in new financing. Excess electricity may be diverted to industrial use and crypto mining.
The IMF urged faster governance reforms in power distribution companies (DISCOs). Officials reported progress on privatizing three profitable units. Loss-making companies are expected to be transferred to private management soon.
Revenue performance was also reviewed. The FBR collected Rs11.74 trillion last year, falling short of the Rs12.97 trillion target. Officials blamed slow economic activity, floods, and unresolved tax cases worth over Rs250 billion. Despite this, Pakistan achieved a primary surplus of Rs2.4 trillion—the highest in 24 years—and limited the fiscal deficit to 5.4% of GDP. Income tax filers increased from 7 million to 7.7 million.
The IMF continues to monitor Pakistan’s fiscal and energy reforms closely. Officials emphasized the government’s commitment to meet targets and implement structural improvements across the energy and revenue sectors.
In other related news also read Pakistan Meets Most IMF Conditions Ahead Of Review Mission
