Islamabad: Pakistan and the International Monetary Fund (IMF) are preparing to revise the country’s fiscal framework for the ongoing financial year following updated assessments that place recent flash flood losses at around PKR 650 billion.
The revisions are expected to impact the Federal Board of Revenue’s (FBR) tax and non-tax revenue targets, as well as key macroeconomic projections under the USD 7 billion Extended Fund Facility (EFF) and Resilience Sustainability Facility (RSF).
Initial evaluations had indicated limited damage, but a comprehensive Rapid Need Assessment (RNA) conducted across all four provinces has now estimated total losses at PKR 650 billion. Officials cautioned that this figure could rise further once international donors, including the World Bank, Asian Development Bank, European Union, and UNDP, validate the provincial assessments.
Government sources said the initial GDP growth forecast of 4.2% for FY26 may be revised downward by 0.6% to 1% to account for disruptions caused by the floods. Earlier estimates had pegged losses at PKR 371 billion, but the latest figures suggest a significantly higher economic impact.
The updated damage assessment is expected to prompt a downward adjustment in the fiscal framework. The FBR’s tax collection target will likely be reduced from PKR 14.13 trillion to PKR 14.001 trillion, while non-tax revenue goals will also be revised. The changes could affect provincial revenue surpluses, currently projected at PKR 1.465 trillion for the current fiscal year.
On the expenditure side, the federal government is not expected to cut the overall Public Sector Development Programme (PSDP) allocation of PKR 1 trillion. However, it may slow the release of funds during the first half of the fiscal year (July–December) to maintain fiscal discipline and achieve the primary surplus target of 2.4% of GDP.
Internal reallocations have already been made within the PSDP, including PKR 20 billion earmarked for FBR digitization and development projects, such as the installation of new equipment at border points.
Officials said the revised fiscal framework will form part of the upcoming staff-level discussions with the IMF review mission, which are expected to pave the way for policy-level approval and continuation of financial support under the EFF and RSF.
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