The International Monetary Fund (IMF) has unveiled 11 fresh conditions for Pakistan as part of its ongoing financial assistance programme, bringing the total number of conditions under the bailout to 50. This update comes through a detailed staff-level report released on Saturday, as cited by The Express Tribune.
These conditions are tied directly to the disbursement of the next tranche of IMF funds, and aim to steer Pakistan toward structural reforms amid its continuing economic challenges.
Key Fiscal Demands and Budgetary Benchmarks
At the heart of the IMF’s latest requirements is parliamentary approval of a PKR 17.6 trillion federal budget, including:
PKR 2.414 trillion allocated for defence spending — a 12% increase from the previous fiscal year.
PKR 1.07 trillion earmarked for development expenditures.
Mandatory parliamentary approval of the FY2026 budget by June 2025.
Interestingly, sources indicate the defence budget could exceed PKR 2.5 trillion, should military tensions with India persist, pushing spending up by 18% over IMF projections.
Energy Sector Reforms and Consumer Impact
The energy sector features prominently in the new set of conditions:
Electricity tariffs must be rebased annually starting July 1, 2025, to ensure full cost recovery.
Gas tariff adjustments are now mandated on a semi-annual basis, with the next review due by February 15, 2026.
The Captive Power Levy Ordinance must be permanently approved to encourage industries to return to the national grid.
Legislation must be passed to eliminate the PKR 3.21 per unit cap on the debt service surcharge — a move aimed at addressing circular debt caused by mismanagement.
Provincial Responsibilities and Agricultural Tax Overhaul
The IMF is also holding Pakistan’s four provincial units accountable. Each must implement and operationalize agricultural income tax legislation that includes:
Taxpayer registration systems
Outreach campaigns
Plans for stronger enforcement
These initiatives must be in place by June 2025.
Governance and Long-Term Structural Reforms
To strengthen transparency and accountability, Pakistan is required to:
Publish a governance action plan based on a recent IMF diagnostic review.
Develop a post-2027 financial sector strategy, focusing on institutional and regulatory reforms for the years 2028 onward.
In addition, the IMF wants the government to phase out all incentives currently offered to Special Technology Zones and industrial parks by 2035, with a comprehensive transition plan due by year-end 2025.
Trade Policy Shift: Easing Vehicle Import Restrictions
In a move favorable to consumers and small-scale importers, the IMF has asked Pakistan to relax import restrictions on commercially used vehicles. By July 2025, all required legislation must be in place to allow the import of used vehicles up to five years old, instead of the current limit of three years.
Geopolitical Risks Loom Large
The IMF report also cautioned that rising border tensions with India pose a serious threat to Pakistan’s ability to meet its fiscal and reform objectives. While financial markets have so far remained stable, any escalation could derail the programme’s progress.
