Pakistan achieved three out of five key IMF fiscal targets for its next $1B loan tranche, driven by high interest rates and robust petroleum levy collections, but fell short on tax base expansion in H1 FY26.
The Ministry of Finance reported success in primary budget surplus, provincial cash surplus, and provincial tax revenue, but missed overall tax collection (FBR short PKR330B on PKR6.49T target) and retail income tax (PKR366B goal unmet despite including corporates).
Revenue Boosts and Provincial Strength
Federal primary surplus hit PKR4.1T (3.2% GDP) vs PKR3.2T target, fueled by SBP's PKR2.42T profits and PKR823B petroleum levy. Provinces delivered PKR1.18T cash surplus (vs PKR752B), with revenues at PKR569B (over PKR488B); Punjab led at PKR609B, followed by Sindh (PKR353B), KP (PKR175B), Balochistan (PKR42B).
Federal spending reached PKR7.1T, with interest at PKR3.6T, defence PKR1.04T, pensions PKR504B. Under the $7B IMF program (nearing 50 conditions), Pakistan eyes full-year provincial surplus of PKR1.5T amid power subsidy and BISP compliance.
