The IMF imposes 11 new conditions on Pakistan, warning of risks of bailout schemes: Report
The IMF’s employee-level report released on Saturday also said: “The employee-level report also said: “If the rising tensions between India and Pakistan continue or worsen, it may increase the risk of the financial, external and reform goals of the program”.
The report further notes that tensions between Pakistan and India have significantly increased in the past two weeks, but so far the market response has remained modest, with most recent earnings in the stock market maintaining moderate growth and moderate expansion.
The IMF report shows that the defense budget for the next fiscal year is Rs 2.414 trillion, up from Rs 252 billion or 12%.
Compared to the IMF’s forecast, the government has said it has allocated more than Rs 2.5 trillion or more budgets after confronting India earlier this month.
India conducted a precise strike under Operation Sindoor on terrorist infrastructure on early May 7 in response to the April 22 Pahalgam terrorist attack that killed 26 people. After India’s operations, Pakistan attempted to attack Indian military bases on May 8, 9 and 10. India and Pakistan reached an understanding on May 10 to end the conflict four days after a fierce cross-border drone and missile strike. Express Tribune’s report said the IMF had 11 more conditions against Pakistan, raising the total conditions to 50.
It imposes new conditions, namely, “consistent with the IMF employee agreement to achieve the planned target by the end of June 2025” to ensure “parliamentary approval for fiscal year 2026”.
The IMF report shows that the total size of the federal budget is Rs 17.6 trillion, including Rs 1.07 trillion in development expenditures.
New conditions have also been imposed in the provinces, where four federal units will implement new agricultural income tax laws through a comprehensive plan, including the establishment of an operating platform for processing income, identification and registration of taxpayers, communication campaigns, and compliance improvement programs.
The deadline for each province is June this year.
Under the third new condition, the government will issue a governance action plan based on recommendations from the IMF’s governance diagnostic assessment.
The purpose of the report is to publicly identify reform measures to address key governance loopholes.
Another new condition states that the government will prepare and release a plan outlining the government’s institutional and regulatory environment since 2028, starting from 2028.
In the energy field, four new conditions have been introduced. The government will issue an annual electricity tariff by July 1 this year to maintain cost-recovery levels of energy tariffs.
The report will also issue a notice of semi-annual gasoline tariff adjustments by February 15, 2026 to maintain cost recovery levels.
According to the International Monetary Fund, Parliament will also adopt legislation to make the Prisoner’s Power Taxation Ordinance permanent at the end of this month. The government has increased the costs of industries forcing them to move to the state grid.
Parliament will also adopt legislation to eliminate the maximum unit cap of debt surcharges, which is with the advantage of punishing honest electricity consumers to pay for the power sector inefficiency.
The IMF and the World Bank pointed out that in addition to government bad governance, wrong energy policies also lead to the accumulation of revolving debt. The report said the deadline for deletion caps is at the end of June.
The IMF also imposed a condition that Pakistan will develop plans based on the assessment of all incentives for special technical zones and other industrial parks and other regions by 2035. The report must be prepared by the end of the year.
Finally, in a consumer-friendly situation, the IMF has asked Pakistan to submit all necessary legislation to the parliament to increase all quantitative restrictions on commercial imports of used cars (initially only for vehicles from the end of July to five years. Currently, vehicles can only be imported for up to three years.
