Pakistan nears qualifying for $1 billion IMF installment as certain targets achieved

Pakistan has met some of the pivotal conditions of the International Monetary Fund (IMF) to qualify for the $1 billion installment.

The country is required to achieve certain benchmarks in six months of the current fiscal year, including a primary balance surplus, provinces recording surpluses, and provinces improving their revenue collection.

According to the data released by the Ministry of Finance for the six months ended December 31, 2024, the government has comfortably achieved the target of primary balance, which was up by PKR 700 billion ($2.5 billion), reaching PKR 3,600 billion, whereas the target was PKR 2,900 billion.

In the same period last fiscal year, the primary balance stood around PKR 2,407 billion.

The fiscal deficit in six months was around 1.2% of the GDP, showing signs of improvement compared to 2.3% recorded in the same period last year.

Moreover, the revenues of provinces also exceeded the target of the IMF for six months, hitting PKR 442 billion against the target of PKR 376 billion. In the same period of six months of 2023-24, the revenue collection of provinces was around PKR 365 billion, the government data said.

Collection from Punjab stood around PKR 169.6 billion, Sindh PKR 226.7 billion, KPK around PKR 30.6 billion, and Balochistan PKR 15.4 billion.

Another milestone achieved has been provinces showing a surplus of PKR 25 billion from the target prescribed by the IMF to PKR 750 billion, collecting around PKR 775 billion.

The worrisome situation for the country has been lesser tax collection at the federal level and continuous principal and interest payments on external debts.

The revenue collection missed the target as the net collection during the July to December period was PKR 5,624 billion against the target of PKR 6,009 billion, falling short by approximately PKR 385 billion.

Though it is manageable if debt payments are not eating away our revenues. The debt payments soared to PKR 5,141 billion, which is almost 91% of the tax revenue. In the same period, markup payments were around PKR 4,219 billion, evaporating revenue by 94.4%.

Defence spending also shot up by 17.5% to PKR 890 billion, according to the data from the Ministry of Finance.

Overall expenses shot up by 22% or PKR 1,500 billion to PKR 8,200 billion, mainly because of an increase in markup payments, pension, and civil government expenditures.