IMF Eyes Rs400B Shortfall, GDP Cut for Pakistan

ISLAMABAD: The International Monetary Fund (IMF) has estimated a potential revenue shortfall exceeding Rs400 billion for Pakistan in the current fiscal year, provided there are equivalent cuts in government expenditure, according to sources cited by The News on Tuesday.

Policy-level discussions between Pakistani authorities and the visiting IMF review mission are underway and set to extend through Wednesday. The Ministry of Finance conveyed to the Fund that government expenditures are largely rigid, posing challenges to aligning them with the anticipated revenue gap.

The Federal Board of Revenue (FBR) has committed to pursuing the Rs14.13 trillion tax collection target, despite first-quarter shortfalls. IMF officials highlighted persistent external vulnerabilities, warning that regional tensions or spikes in global commodity prices could further jeopardize macroeconomic stability.

During the talks, Pakistan sought a downward revision of FY2025-26 GDP growth from the official 4.2% estimate to around 3.5%. Consumer Price Index (CPI)-based inflation is forecasted between 7% and 8%. The discussions also addressed recalibrating provincial primary budget surplus targets to accommodate post-flood reconstruction needs.

Post-flood damage assessments, initially pegged at Rs371 billion, have been updated to over Rs650 billion. Pakistan has requested fresh evaluations from the World Bank, Asian Development Bank, European Union, and UNDP.

The IMF and Pakistan are drafting the Memorandum of Economic and Financial Policies (MEFP) and may establish new structural benchmarks prior to the next programme review. Key topics include fiscal and macroeconomic assumptions, the Reko Diq mining project, and emerging tariff and automotive policy frameworks.