IMF imposes 11 new conditions on Pakistan, bringing the total to 50 conditions for $7 billion loan, says sustained tensions with India can heighten risks to the program
A week after the International Monetary Fund (IMF) approved $1 billion for Pakistan under the Extended Fund Facility (EFF), the lending body has imposed 11 new conditions on the country. A Staff Level report unveiled by IMF on Saturday listed the new conditions, reported The Express Tribune.
The new conditions include approval of a new Rs17.6 trillion budget, increasing debt servicing surcharge on electricity bills, and lifting restrictions on the import of more than three years old used cars. With the new 11 conditions, the total number of conditions for the $7 billion loan has gone up to 50.
The report also said that “rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten risks to the fiscal, external and reform goals of the programme”. It states that Pakistan’s defence budget for the next fiscal year at Rs2.414 trillion, which is higher by 12%. In contrast, the Pakistan govt has indicated that it will allocate over Rs2.5 trillion, up by 18%, after India’s operation Sindoor. Notably, Pakistan’s financial year is July to June.
One of the important conditions is obtaining parliamentary approval for the budget of financial year 2026, in line with IMF staff agreement, to meet targets of the program by end of June 2025. As per IMF, total federal budget will be Rs17.6 trillion.
A new condition has also been imposed on the provinces, where the four federating units will implement the new Agriculture Income Tax laws through a comprehensive plan. This includes the establishment of an operational platform for processing returns, taxpayer identification and registration, a communication campaign, and a compliance improvement plan.
As per another condition, the government will publish a governance action plan based on the recommendations of the Governance Diagnostic Assessment by the IMF. The government will also have to give annual inflation adjustment of the unconditional cash transfer programme to maintain people real purchasing power. The fifth condition is that the government will prepare and publish a plan outlining the government’s post-2027 financial sector strategy, outlining the institutional and regulatory environment from 2028 onwards.
Four new conditions have been added in the energy sector, relating to govt actions needed to maintain tariffs at cost recovery levels, making the captive power levy ordinance permanent, and removal of cap on the debt service surcharge.
As per IMF, Pakistan is also required to prepare a plan to fully phase out all incentives in relation to Special Technology Zones and other industrial parks and zones by 2035. The finance body has also asked Pakistan govt to lift all quantitative restrictions on import of used vehicles.
In addition to imposing new conditions, the IMF has also made adjustments in the earlier conditions.
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