Pakistan’s second half-year economic review with the International Monetary Fund (IMF) has entered the technical phase, with policy-level discussions scheduled for next week.

Officials from both the federal and provincial governments have asked the IMF mission to reconsider budget surplus targets, citing extensive losses caused by recent floods.

Ongoing technical talks with IMF

According to sources, representatives from the federal and provincial governments have held detailed sessions with the IMF mission. While technical talks are ongoing, the crucial policy-level discussions on Pakistan’s fiscal performance will take place next week.

Also Read: IMF concerned over Pakistan's unfulfilled reforms, targets

Officials have specifically requested a review of the provincial budget surplus target of Rs1,464 billion, which appears unachievable due to flood-related expenditures. The federation has also sought relaxation on the primary budget surplus target of Rs3.1 trillion.

Provinces struggling with surplus commitments

Last fiscal year, provinces had already fallen short by Rs280 billion against their agreed surplus target, sources noted. This year, the impact of floods has worsened the situation across multiple provinces.

Punjab, which has faced the highest flood-related losses this year, fears it will not be able to achieve its Rs740 billion surplus target. Sources add that Punjab has not yet made any final commitment in the ongoing talks.
Sindh has officially requested the IMF to review its Rs370 billion surplus target, citing disaster-related expenses.
Khyber Pakhtunkhwa (KP) has linked its promised surplus of Rs220 billion to receiving full transfers from the federal government.
Balochistan has pledged a surplus of over Rs150 billion, but sources believe the province may also struggle to meet its goal.

Policy talks to decide way forward

Sources confirm that none of the three major provinces – Punjab, Sindh, and KP – are in a position to achieve the primary surplus due to the scale of flood damage. The matter will be formally discussed in the policy-level talks next week, where IMF officials and the government are expected to negotiate adjustments to the fiscal framework.

IMF concerned over Pakistan's unfulfilled reforms, targets

While officials in Islamabad describe the discussions as “positive and constructive,” the IMF mission has flagged concerns over unfulfilled reform commitments and targets, and legislative delays.

IMF flags missed reform targets

According to official documents, Pakistan was required to amend laws in at least 10 government institutions by June this year under the Memorandum of Economic and Financial Policies. However, the deadline was missed, and the IMF has asked for an explanation.

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

The pending reforms include critical legislation for the Ministry of IT, Commerce, Maritime Affairs, Railways, and Water Resources. Specific laws left incomplete are:

Port Qasim Authority Act and Gwadar Port Ordinance
Karachi Port Trust Act 1980 (amendment not completed)
Pakistan Telecom Reorganization Act (draft not shared)
State Life Insurance Nationalization Order (still under review)
WAPDA Act (changes postponed)
Pakistan Railways Act 1890 (consultations ongoing)
Exim Bank Act (draft prepared but pending approval)
National Bank Act (amendment tied to 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.