IMF Urges Pakistan to Exclude Provincial Projects from Federal PSDP

The International Monetary Fund (IMF) has issued a stern directive to Pakistan, demanding the exclusion of provincially mandated development projects from the federal Public Sector Development Programme (PSDP), insisting on strict compliance with expenditure responsibilities under the 18th Constitutional Amendment.

Government insiders revealed that the upcoming federal budget is poised to eliminate 168 provincial development schemes, valued at Rs1,100 billion, from the PSDP. Of this, Rs300 billion has already been disbursed, but the IMF mandates that the remaining Rs800 billion be fully funded by provincial governments.

This push is a cornerstone of the IMF’s rigorous strategy to enforce fiscal discipline and clarify expenditure roles between federal and provincial authorities, aligning with Pakistan’s economic reform commitments under its IMF loan programme.

Finance Minister Muhammad Aurangzeb, currently in New York, is gearing up for high-stakes discussions in Washington during the IMF Spring Meetings. On the sidelines, he is expected to negotiate rescheduling of Pakistan’s Chinese-guaranteed debt and engage with the IMF Managing Director and a senior U.S. Treasury Department official to advance these reforms.