IMF Urges Pakistan's Federal Budget Overhaul: A Push for Provincial Accountability

The IMF requests Pakistan to remove Rs 1.1 trillion in provincially-mandated projects from its federal development budget. This move, underlining constitutional responsibilities, demands provincial funding for these projects. The decision forms part of fiscal discipline efforts amid ongoing economic reform negotiations, as Finance Minister Muhammad Aurangzeb visits Washington for crucial discussions.

The International Monetary Fund (IMF) has pressed Pakistan to exclude provincial development projects worth Rs 1.1 trillion from the federal development budget, according to a report by The Express Tribune on Tuesday.

Rooted in the 18th constitutional amendment, the IMF's demand aims to ensure that provincial authorities shoulder the financial burden of 168 development schemes initially slated for federal support. Of the total cost, which stands at Rs 1,100 billion, Rs 300 billion has already been expended. The remaining Rs 800 billion is expected to be financed through provincial budgets, urging a significant policy shift toward fiscal discipline and transparency in federal-provincial financial engagements.

This request coincides with Pakistan's ongoing attempts to renegotiate terms under a $7 billion loan program facilitated by the IMF last year. Finance Minister Muhammad Aurangzeb is currently in the U.S. for pivotal talks, aiming to address debt rescheduling with China during the IMF's upcoming spring meetings. As the nation gears up to present its 2025-26 budget in June, adherences to these fiscal restructurings will mark a critical balancing act between federal oversight and provincial autonomy.

(With inputs from agencies.)