Pakistan has started its second half-yearly economic review talks with the International Monetary Fund (IMF). Officials briefed the IMF on key indicators like growth, inflation, remittances, exports, and flood damages. The Finance Ministry reported a growth rate of 3.7% to 4%, slightly below the 4.2% target. Inflation for the year is forecast at 7%, while September inflation is expected to be between 3.5% and 4.5%. Rising flood-related costs could push prices up in the coming months.
Punjab, along with other provinces, joined the discussions to share their fiscal progress. However, Punjab declined to declare a budget surplus. It cited severe flood damage as the main reason and said victim relief will be funded through provincial resources. This move may impact Pakistan’s ability to meet fiscal targets under its agreement with the IMF. An official damage report is being prepared, and the IMF has asked for a final version soon.
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Despite these challenges, officials shared some positive economic signals with the IMF. Remittances are expected to hit a record $43 billion this fiscal year. This would exceed the budget target of $39.4 billion. The increase is largely due to contributions from overseas Pakistanis, especially those helping with flood recovery in Punjab and Khyber Pakhtunkhwa.
On the fiscal front, provinces are required to contribute a combined budget surplus of Rs1,464 billion. Last year, they fell short by Rs280 billion. Punjab’s refusal to commit a surplus adds pressure on federal finances. Meanwhile, Sindh estimates flood damage at Rs50 billion, Khyber Pakhtunkhwa at Rs30 billion, and Balochistan reports minimal losses.
Pakistan’s external economic indicators show a mixed outlook. The current account deficit is expected to stay around $1 billion, which is better than the $2.1 billion target. Exports may reach $34.2 billion, just under the $35.2 billion goal, while imports are projected to hit $65 billion. The IMF will closely watch these numbers as talks continue.