IMF wants 'end' of provincial funding by centre in Pakistan

ISLAMABAD: The International Monetary Fund (IMF) has demanded Pakistan to exclude provincial development projects from the federal development budget, ARY News reported citing sources.

According to sources, the international money lender has urged the federal government to cease funding matters devolved to provinces under the 18th Constitutional Amendment.

Sources revealed that the IMF’s directive has compelled the federal government to remove 168 provincial projects from the upcoming federal budget.

Sources further said that these 168 provincial projects, currently part of the federal development budget, have been progressing slowly. The total cost of these projects is estimated at PKR 1,100 billion, with the federal government having already spent PKR 300 billion. The IMF has prohibited further expenditure of PKR 800 billion on these projects, sources added.

As a result, the 168 projects of provincial nature will now need to be completed using provincial development budgets, shifting the financial responsibility to the provinces, sources confirmed.

The demand came at the time when Finance Minister Muhammad Aurangzeb reiterated the Pakistan government’s commitment to maintaining the reform momentum.

During his meeting with IMF Managing Director (MD) Ms. Kristalina Georgieva in Washington D.C. he thanked the IMF team for reaching a Staff-Level Agreement on the First Review under the Extended Fund Facility (EFF) and a new arrangement under the Resilience and Sustainability Facility (RSF).

In his meeting with President of the World Bank Group Ajay Banga, the Finance Minister appreciated the World Bank’s ongoing assistance in crafting a comprehensive implementation strategy and action plan to operationalize the Country Partnership Framework (CPF) while simultaneously enhancing overall efficiency.

Muhammad Aurangzeb also provided a detailed overview of Pakistan’s macroeconomic turnaround and reaffirmed the government’s unwavering commitment to ensuring sustainable economic stability.

The finance minister also held a meeting with Assistant Secretary of the US Department of the Treasury, Robert Kaproth and briefed him on Pakistan’s improving macroeconomic indicators.

Muhammad Aurangzeb highlighted ongoing reforms in taxation, energy, privatization, state-owned enterprises (SOEs), pensions, and debt management.

At a luncheon hosted by the US-Pakistan Business Council at the US Chamber of Commerce, he emphasized the importance of regional trade, market diversification and sectoral expansion.