The International Monetary Fund (IMF) has imposed 11 new conditions on Pakistan for the release of the next tranche of its bailout programme for the debt-ridden economy, The Express Tribune reported. A staff-level report released by the IMF on Saturday warned that “rising tensions between India and Pakistan, if sustained or deteriorated further, could heighten risks to the fiscal, external and reform goals of the programme.” The Pakistan-focused IMF report further noted that the enterprise risks have increased.
What Are The 11 Conditions?
The 11 new conditionalities include approval of a new Rs 17.6 trillion budget for 2025-26, aligned with the IMF staff agreement to ensure the programme’s targets are met.
Whereas, on the fiscal front, the IMF has set a new condition asking Pakistan to implement the new Agriculture Income Tax laws through a comprehensive plan. This includes establishming of an operational platform for processing returns, taxpayer identification and registration, a communication campaign, and a compliance improvement plan, Express Tribune reported, citing the IMF report. The deadline for the same is June this year.
The third condition states that the government will publish a governance action plan based on the recommendations of the Governance Diagnostic Assessment by the IMF. The purpose of the report is to publicly identify reform measures to address critical governance vulnerabilities, reported Express Tribune.
The next condition requires that the government will give annual inflation adjustment of the unconditional cash transfer programme to maintain people’s real purchasing power.
Furthermore, the IMF staff report also includes a condition on Pakistan to prepare and publish a plan detailing the government’s post-2027 financial sector strategy. It should outline the institutional and regulatory framework from 2028 onward.
Additionally, four new conditions have been introduced in the energy sector.
A condition has also been set on the trade, investment policy, and deregulation front. Pakistan has been asked to prepare a plan based on the assessment conducted to fully phase out all incentives in relation to Special Technology Zones and other industrial parks and zones by 2035.
Lastly, Pakistan has been asked to submit to the Parliament all required legislation for lifting all quantitative restrictions on the commercial importation of used motor vehicles (initially only for vehicles less than five years old by end of July.The rationale behind this condition is to liberalise trade and increase vehicle affordability.
The IMF had reviewed the Extended Fund Facility (EFF) lending programme (USD 1 billion) on May 9 and also considered a fresh Resilience and Sustainability Facility (RSF) lending programme (USD 1.3 billion) for Pakistan.
The recent review approval reportedly brings total disbursements to USD 2 billion out of the USD 7 billion programme for Pakistan.
