The International Monetary Fund (IMF) has indicated it is willing to allow roughly Rs500 billion in within-budget adjustments to offset the financial impact of recent floods in Pakistan, but has so far resisted calls to reduce the country’s primary budget surplus target, The Express Tribune reported.
Federal and provincial authorities have requested flexibility against the primary surplus and cash surplus targets to meet urgent rehabilitation needs for flood-affected communities. Punjab, the worst-hit province, has conditionally pledged to deliver its Rs740 billion cash surplus provided the Federal Board of Revenue (FBR) meets its Rs14.1 trillion annual target.
Government sources said the IMF is open to adjusting expenditure within the budget by reducing allocations from the Public Sector Development Programme (PSDP) and using the contingency pool but is reluctant to provide additional fiscal space beyond this.
The proposed adjustments could include a Rs300 billion cut from the PSDP and Rs150 billion from the contingency fund, leaving the overall primary surplus target intact.
Revenue collection remains a key constraint. The FBR may see its annual target reduced from Rs14.13 trillion to Rs13.96 trillion, with Rs170 billion of that shortfall offset through adjustments in non-tax revenue and Punjab’s Agriculture Income Tax. However, officials said the FBR’s first-quarter collection fell short by Rs198 billion, complicating efforts to meet IMF expectations.
Punjab Information Minister Azma Bukhari reaffirmed the province’s commitment to its cash surplus, stating it depends on the FBR achieving its target. “Punjab is committed to the estimated provincial share of Rs740 billion, contingent upon FBR meeting its target of Rs14.1 trillion,” she said. She added that flood damage assessments are ongoing, and final rehabilitation costs will guide any necessary budget adjustments.
The government has pitched a post-flood GDP growth target of 3.5–3.9%, while the IMF projects growth may not exceed 3%. Similarly, the projected $500 million current account deficit may face scrutiny due to higher imports and declining exports.
