ISLAMABAD:
Prime Minister Shehbaz Sharif has sought an explanation for missing three International Monetary Fund (IMF) conditions, as Punjab blames the Centre for weak revenue projections and withholding its share of taxes — a shortfall that led to the province breaching its cash surplus target.
Sources said the federal government believes the target was missed due to Punjab’s overspending on development, despite both governments being led by the PML-N.
The premier had asked for a response from the Ministry of Finance and the Federal Board of Revenue to The Express Tribune’s story regarding Pakistan missing three key IMF targets.
The newspaper reported that Pakistan missed the conditions on meeting the Rs12.3 trillion tax target, collecting Rs50 billion from traders and generating over Rs1.2 trillion cash surpluses by the four provinces.
According to a fiscal operations summary released by the Ministry of Finance this week, the provinces fell short of saving the targeted Rs1.2 trillion in the last fiscal year by a wide margin.
The provincial governments had given the understanding to the IMF and the federal government to generate Rs1.2 trillion cash surpluses, subject to the condition that the FBR would meet its tax target. However, the four provinces collectively generated a cash surplus of Rs921 billion, missing the IMF target by 296 billion.
During deliberations, the sources said that the federal government authorities argued that the provincial cash surplus condition has been primarily missed because of overspending by Punjab. They said that when the federal government approached the Punjab government, it threw the responsibility back on the Centre.
The sources said that the Punjab government told the Centre that the provincial cash surplus target could not be met because the Finance Division did not transfer the due share of taxes under the National Finance Commission and the FBR failed to achieve its targets.
However, the Finance Ministry authorities were of the view that the other three provinces also received less money compared to the projections but they still performed much better with Balochistan exceeding the IMF target.
The finance ministry documents stated that Punjab, with total revenue of Rs4 trillion, spent Rs3.6 trillion, generating a surplus of Rs348 billion. The amount was Rs282 billion or 45% less than the IMF’s target of Rs630 billion.
Sindh also missed the IMF target by a margin of Rs16 billion or 5.5% and showed a cash surplus of Rs283 billion. The Khyber Pakhtunkhwa government was almost close to the target with a gap of only Rs2 billion but the Balochistan government exceeded the target by Rs3 billion.
But the provincial authorities said that they were being painted as the culprit despite the Finance Ministry did not pay them their due shares against the actual revenue collection.
“Based on the actual FBR collection of Rs11.7 trillion, the Finance Division withheld Punjab’s June tranche of the federal divisible pool amounting to 190.8 billion,” said Azma Bukhari, Punjab’s Information Minister in response to questions sent by The Express Tribune.
Azma Bukhari further stated that had the Rs191 billion amounts been released by June, Punjab’s surplus would have been Rs539.2 billion against budgeted surplus of 630 billion, which was committed with an FBR target of Rs12.97 trillion regardless of any FBR shortfall.
In the last budget, the government had given Rs12.97 trillion worth of tax target to the FBR but it ended up collecting at Rs11.744 trillion — the second highest ever shortfall of Rs1.23 trillion.
The provincial Information Minister added that Punjab had consistently maintained with the federal government that Punjab’s surplus commitment was contingent upon and proportional to the FBR achieving its collection target.
She further stated that the Rs191 billion of Punjab’s federal divisible pool share was retained and reflected as federal cash balance, which significantly improved the federal government’s primary balance, at the expense of Punjab’s actual surplus.
“Up to as late as mid-June 2025, provinces had no formal intimation from the Finance Division regarding reduction of FBR target below the revised target of Rs12.3 trillion”, said the Information Minister. She said that this was the last formally revised target of FBR with the IMF after the first review of 2024-25.
On 12 June 2025, Finance Division formally intimated a revised estimate of provincial share for fiscal year 2024-25, calculated against a projected FBR collection of Rs11.9 trillion, the provincial government stated. It added even then, the actual collection of FBR reached Rs11.74 trillion.
The provincial Information Minister said that Punjab had been on track to meet its expenditure and receipt targets, along with surplus objectives over the course of the last fiscal year. Had FBR collected this full amount of Rs12.3 trillion, Punjab’s surplus would have increased by an additional Rs160 billion while the total surplus would have been Rs699 billion, she added.
“The FBR ended well below even the revised estimate mark. With such weak revenue forecasting and drastic downward adjustments so late in the fiscal year by FBR, it is not reasonable to expect a province to meet the budgetary estimates of surplus targets”, said the Information Minister.
