The International Monetary Fund (IMF) has imposed 11 new and strict conditions on Pakistan as part of negotiations for the continuation and potential expension of its Extended Fund Facility (EFF) bailout programme.
This move reflects both Pakistan's deteriorating macroeconomic situation and the IMF's concerns about fiscal indiscipline, weak structural reform and escalating geopolitics tensions, particularly after India's Operation Sindoor in May 2025.
Pakistan entered into a $3 billion Stand-by Arrangement (SBA) with the IMF in 2023 after failing to complete the previous EFF successfully with the SBA due to expire soon, Islamabad is seeking a fresh, longer tterm loan package. However, due to recurring policy failure, delay in reform and external shocks the IMF has now raised the bar with new performance bechmarks and structural conditions.
The IMF has warned Pakistan that faliure to adhere to these new demands could result in suspension of the next disbursment and possible derailment of the programme.
Here are 11 New IMF Conditions
Parliamentary Approval of a Fiscal 2025-26 Budget
Pakistan must pass a federal budget of Rs 17.6 trillion by June 2025. It includes Rs 1.07 trillion in development expenditure. IMF wants transparent and credible fiscal targets with proper parliamentary oversight.
Provincial Agricultural Income Tax Implementation
All four provinces must legislate and implement agricultural Income tax laws. IMF insights on Taxpayer registration and verification, return filing mechanism and awareness and compliance drives.
IMF Governance Diagnostic Plan
Pakistan must publish and Act on 'Governance Action Plan'. Based on an earlier IMF diagnostic assessment, it hightlights Weakness in Anti- Corruption, public procurement inefficiencies and state owned enterprise governance.
Financial Sector Roadmap Beyond 2027
Pakistan must prepare a post 2027 Financial Sector Strategy, outlining banking sector reforms, capital market deepening and regulatory modernization.
Energy Sector Structural Reforms
This includes 4 interlinked reforms electricity tariff rebasing, gas tariff semi annual revisions, captive power levy ordinance and debt service surcharge removal.
Relaxing Vehicle Import Restrictions
Pakistan must lift the 3 year age limit on imposed used cars, raising it to 5 years. This addresses IMF concerns over distortionary trade policies and black markets.
End of special Technology Zone (STZ) Incentives
All tax and financial incentives for STZs and industrial parks must be phased out by 2035. A detailed sunset plan must be submitted by the end of 2025.
Cash Transfers Indexed to Inflation
The Benazir Income Support Programme (BISP) and similar schemes must adjust payouts annually to musch inflation and ensure real income support for vulnerable populations.
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