Global lender urges Islamabad to cease financing devolved matters, impacting upcoming budget and requiring provinces to shoulder financial responsibility.
Key Takeaways:
i) The International Monetary Fund (IMF) has asked Pakistan to stop including provincial development projects in the federal budget.
ii) This directive necessitates the removal of 168 provincial projects, valued at PKR 1,100 billion, from the upcoming federal budget.
iii) Provinces will now be responsible for funding these projects, with PKR 800 billion in unspent federal funds now off-limits.
Islamabad, Pakistan – April 22, 2025 – Citing sources, ARY News reported that the International Monetary Fund (IMF) has pressed the Pakistani government to discontinue the practice of funding development projects that fall under the jurisdiction of provinces through the federal budget. This demand aligns with the spirit of the 18th Constitutional Amendment, which devolved several responsibilities to the provinces.
According to insiders, the IMF’s insistence has led the federal government to exclude 168 ongoing provincial projects from the Public Sector Development Programme (PSDP) for the next fiscal year. These projects, which have seen a cumulative expenditure of PKR 300 billion out of their total estimated cost of PKR 1,100 billion, have reportedly been progressing at a slow pace.
The IMF has reportedly barred any further federal spending on these 168 initiatives, effectively freezing the remaining PKR 800 billion allocated to them. Consequently, the onus of completing these projects now shifts entirely to the provincial development budgets. This significant change in financial responsibility is expected to have considerable implications for provincial resource allocation and development strategies.
This development occurs as Finance Minister Muhammad Aurangzeb reaffirmed the government’s commitment to maintaining the momentum of economic reforms during a meeting with World Bank Group President Ajay Banga. The Finance Minister expressed gratitude for the World Bank’s ongoing support in formulating a comprehensive strategy to implement the Country Partnership Framework (CPF) and enhance overall efficiency.
