In a recent virtual round of talks, the International Monetary Fund (IMF) expressed satisfaction over Pakistan’s economic performance at both federal and provincial levels, but called on provincial governments to step up their financial independence—starting with enforcing taxes on agricultural income and funding their own development projects.

The IMF delegation held online discussions with provincial officials, including representatives from Khyber Pakhtunkhwa and Balochistan, as part of preparations for the upcoming budget. During the talks, the IMF emphasized that provinces must stop relying on federal transfers for development spending and start generating their own funds.

One of the IMF’s key demands is the implementation of income tax on agricultural earnings beginning July 1, without exemptions. This move aims to widen the tax net and ensure provinces contribute meaningfully to national revenue.

The Fund also received assurances from provincial authorities that they would maintain a budget surplus in the upcoming fiscal year, further boosting the IMF’s confidence in the country’s economic trajectory.

In a significant development, the IMF team is expected to arrive in Pakistan tomorrow to continue in-person negotiations on the budget framework. The delegation is scheduled to meet officials from the Ministry of Finance, Planning Commission, Federal Board of Revenue (FBR), and the State Bank of Pakistan.

These discussions come at a critical time as Pakistan aims to secure a new loan program and demonstrate fiscal responsibility ahead of its 2025 economic roadmap. The IMF’s clear message is that economic reform must start from the grassroots—and provinces must now take the lead.