Pakistan IMF fiscal targets hit on three of four conditions

Pakistan IMF fiscal targets look largely on track, because the government hit three of four conditions for July to September, ministry data show.

Budget consolidation stayed on course, but the pace slowed. Expenditure rose as the federal and provincial governments entered their third year. Meanwhile, the centre received just Rs57.5 billion in provincial grants.

Which Pakistan IMF fiscal targets the government hit

The country cleared the primary surplus condition comfortably. Against a quarterly goal of Rs1.95 trillion, Islamabad booked Rs2.97 trillion, equal to 2.1% of GDP. Booking the full annual profit of the central bank in the first three months lifted the fiscal surplus.

That profit itself shrank. It fell 20%, a drop of Rs495 billion, to just over Rs1.9 trillion.

Tax collectors also delivered. The Federal Board of Revenue gathered Rs3.089 trillion, Rs60 billion above its Rs3.03 trillion goal. Collections weakened after September, though, leaving a Rs95 billion gap across the first four months.

The provinces split the results. Together they ran a cash surplus of Rs599 billion, Rs83 billion above target. Three of them posted surpluses, while Balochistan recorded a deficit. However, they raised Rs301 billion in taxes, falling Rs88 billion short.

Provincial grants fall far short

Under a June understanding, the provinces agreed to hand over Rs1.035 trillion in cash for security and nationally important projects. In the first quarter, only Rs57.5 billion arrived, about 6% of the yearly commitment.

Punjab gave Rs32.5 billion, the largest share. Khyber Pakhtunkhwa contributed Rs12.7 billion, though it had publicly tied the money to a meeting with the jailed Imran Khan. Sindh gave Rs8.5 billion and Balochistan Rs3.7 billion.

Weak grants are the clearest gap in Pakistan IMF fiscal targets. In short, the government cleared the primary surplus and revenue targets, and only the provincial tax target slipped. Separately, the federal government approved Rs275 billion this month for six priority water projects.

Spending and the road for Pakistan IMF fiscal targets

The centre spent Rs3.1 trillion in three months. Development took only Rs81 billion of that. Interest payments reached Rs1.7 trillion, up Rs322 billion, or a quarter, from last year, and defence cost Rs495 billion.

Non-tax income across the five governments totalled Rs2.6 trillion, 14% lower than last year, mainly because the central bank earned less. The petroleum levy, by contrast, raised Rs382 billion, which is Rs11 billion more than a year ago.

The four provinces spent around Rs1.8 trillion, with Rs1.34 trillion going to development. Their income reached Rs2.4 trillion, and Rs1.9 trillion of it came from their share of federal taxes.

Meeting the International Monetary Fund‘s conditions has kept the programme moving despite early setbacks. According to Finance Minister Muhammad Aurangzeb, the IMF board may convene next month to clear $1.2 billion in loan tranches.

Another report said the fund wants laws covering nine to 10 state-owned enterprises aligned with the main SOE Act by mid-November. For now, Pakistan IMF fiscal targets look on course, yet weak provincial grants and the revenue shortfall remain the weak points to watch.