Provinces given 24 hours to report on pending IMF targets and justify any delay

• IMF reportedly directs to suspend disbursements for flood-hit development projects until verified assessments of needs and losses are provided

The federal government has called on provincial authorities to urgently resolve pending matters related to the International Monetary Fund (IMF) to ensure the smooth completion of the second review under the $7 billion Extended Fund Facility (EFF) by the weekend, Dawn reported. 

According to the report, the Prime Minister’s Office (PMO) contacted federal officers in provincial capitals on Sunday night, instructing them to facilitate progress on unresolved issues and upcoming fiscal targets linked to the EFF and the $1.4 billion Resilience and Sustainability Facility (RSF). Similar directives were issued to key federal ministries.

Provincial chief secretaries and finance secretaries were asked to submit updates within 24 hours, providing explanations for any delays or unmet targets. Officials said the Ministry of Finance reported that the larger provinces, particularly Sindh and Punjab, had not been fully cooperative regarding IMF commitments.

The provincial governments have missed cash surplus targets for FY25 and continue to show shortfalls in FY26. Sindh has announced a budget deficit of around Rs40 billion, while Punjab has raised concerns over stringent IMF conditions, citing issues of self-respect even in the context of flood-related aid.

The IMF has reportedly instructed authorities to suspend disbursements for flood-hit development projects until verified assessments of needs and losses are provided. The fund has emphasized that support for floods cannot compromise the cash surplus obligations under the national fiscal pact, which requires Punjab to provide Rs740 billion, Sindh Rs370 billion, KP Rs220 billion, and Balochistan Rs185 billion to the federal government for FY26.

Under the national fiscal pact, provinces were required to align their agricultural income tax regimes with federal rules, transition GST on services to a negative list, and implement capital-based property tax measures. Several RSF-related reforms, including water system resilience, disaster response financing, and digitization of records, remain incomplete, particularly in Sindh and Punjab.

The Centre reiterated that provinces must consult the federal Ministry of Finance and the IMF before implementing any policies that could undermine program commitments, as outlined in Pakistan’s Memorandum of Economic and Financial Policies (MEFP).