Pakistan, IMF to reset budget targets after flood losses

ISLAMABAD: Pakistan and the International Monetary Fund are preparing to recalibrate the fiscal framework for the current year as damage estimates from recent flash floods rise, The News reported. A Rapid Needs Assessment by provincial authorities now pegs losses at roughly Rs650 billion, with final validation by a consortium of international donors still pending.

Under the emerging plan, the Federal Board of Revenue’s tax target is expected to be trimmed from Rs14.13 trillion to Rs14.001 trillion, alongside a reduction in non-tax revenue projections. Officials say the downgrade reflects erosion in the growth outlook and additional spending pressures linked to recovery efforts.

The government had initially projected GDP growth of 4.2% in FY26, but officials now see a possible cut to around 3.9%. Depending on the final tally of losses and the broader macro picture, the growth hit could deepen by 0.6–1.0 percentage points, they added.

On the expenditure side, authorities aim to preserve the headline Rs1 trillion Public Sector Development Programme but may slow disbursements in the first half to safeguard the fiscal deficit and a 2.4% primary surplus target. Some reallocations are under way, including Rs20 billion for FBR digitisation and border equipment upgrades.

Talks with the IMF review mission are expected to align budget targets across revenue, spending and external financing, paving the way for a staff-level agreement under the Extended Fund Facility and Resilience and Sustainability Facility.