Pakistan and the International Monetary Fund (IMF) began technical-level discussions on September 25, 2025, focusing on fiscal performance, revenue collection, expenditure trends, and external financing. The talks address critical economic challenges as Pakistan navigates its financial landscape.
The IMF highlighted a Rs1.2 trillion revenue shortfall by the Federal Board of Revenue (FBR) in FY2024-25, compared to a target of Rs12.97 trillion. Despite Rs1.3 trillion in new taxes, FBR collected Rs11.74 trillion after two target revisions. Officials cited Rs250 billion tied up in court cases as a key factor.
Pakistan secured $1.377 billion in external loans in July and August of FY2025-26, part of its $19.9 billion annual goal. Bilateral loans included $200 million from Saudi Arabia’s oil facility. Multilateral lenders, led by the World Bank, contributed $780 million, with support from ADB, AIIB, and Islamic Development Bank.
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The government proposed revising the National Finance Commission (NFC) formula, reducing the 82% population-based provincial share and adding weight for tax performance and low population density. Devolving the Benazir Income Support Programme (BISP) to provinces aims to boost their revenue efforts. Finance Minister Muhammad Aurangzeb chairs the 11th NFC, which comprises a nine-member commission that includes provincial ministers.
Total government spending hit 21.4% of GDP in FY2024-25, up from 19.5%. The fiscal deficit exceeded Rs6.1 trillion, but provinces met the IMF targets with surpluses: Punjab (Rs348 billion), Sindh (Rs283 billion), KP (Rs176 billion), and Balochistan (Rs113 billion). Federal net revenue was Rs 9.946 trillion, against an expenditure of Rs 17.036 trillion. Debt servicing consumed Rs 8.9 trillion, comprising Rs 7.997 trillion in domestic and Rs 890 billion in external debt.
