Islamabad, May 26, 2025: The International Monetary Fund (IMF) rejects budget targets set by the Pakistani government for the upcoming fiscal year, raising serious concerns over unsustainable development planning and weak inter-ministerial coordination.
The rejection adds to the pressure on Pakistan’s economic team as they struggle to secure a new long-term bailout package.
IMF Flags Rs. 10 Trillion Throw-Forward in Development Projects
A key issue raised by the IMF is the massive throw-forward in the Public Sector Development Program (PSDP). This backlog now stands at over Rs. 10,000 billion, indicating a significant number of approved but incomplete infrastructure projects.
- Over 500 development projects are under scrutiny.
- Most projects relate to infrastructure such as roads, energy, and housing.
- Incomplete schemes continue to drain financial resources with minimal returns.
The IMF believes such unchecked expansion of development programs without tangible outcomes poses a fiscal risk.
Planning and Finance Ministries at Odds
Prime Minister Shehbaz Sharif has instructed the Ministry of Planning to provide detailed reports on these 500 projects to assess feasibility and impact. However, internal conflicts between the Ministry of Finance and the Planning Ministry are delaying the finalization of next year’s development budget.
- No consensus has been reached on PSDP allocations.
- The Annual Planning Coordination Committee (APCC) meeting was postponed.
- A new meeting date is yet to be announced.
Read More: Challenges Facing the Industrial Sector in Pakistan – A 2025 Overview
What’s Next?
The APCC is expected to:
- Review performance of ongoing development initiatives.
- Finalize spending strategy for the next fiscal year.
- Align project goals with IMF recommendations.
Until an agreement is reached, uncertainty looms over the future of Pakistan’s economic reform program.
With the IMF rejecting budget targets amid a ballooning development burden and inter-ministerial disunity, Pakistan faces a critical juncture in its fiscal planning. Timely resolution and transparent allocation of funds will be essential to regain donor confidence and secure future tranches.
