IMF may cut Pakistan’s health, education spending target by Rs300 billion as provinces face cash surplus pressure: report

Profit reported, citing The Express Tribune, that the IMF may trim its joint health and education outlay goal for Pakistan by Rs300 billion, bringing it to about Rs3.9 trillion. The reason cited is fiscal strain on the provinces, which have committed to a large cash surplus and grants for the federal government. Government sources said the target of over Rs4.2 trillion would likely be missed again in FY27, and the proposed cut has not been finalised.

Provincial allocations across the five governments sit about Rs500 billion below what the current IMF benchmark requires, and even the reduced figure would leave a gap of roughly Rs200 billion against current budget allocations. The benchmark is indicative under the $7 billion programme, and Finance Secretary Imdad Ullah Bosal told a parliamentary committee last month that it had been repeatedly missed.

Sources added that the IMF had at one point floated making the condition a quantitative performance criterion, which would require an Executive Board waiver if breached. Punjab and Sindh pointed to pressure from a Rs1.7 trillion cash surplus commitment and grants for the federal government under the National Economic Initiative, while Khyber-Pakhtunkhwa gave the IMF assurances it will hit its spending goals. Talks are due to end on Wednesday, and if a staff-level agreement is reached and IMF approval follows, Pakistan would receive around $1 billion under the programme plus more than $200 million under the climate facility.