IMF imposes 11 conditionalities on Pakistan

ISLAMABAD: The International Monetary Fund (IMF) has imposed as many as 11 new conditionalities on Pakistan for the release of the next tranche of its bailout programme for the debt-ridden economy, Pakistan-based Express Tribune reported.

A Staff Level report by the IMF released on Saturday noted 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-focussed IMF report noted that the enterprise risks have increased.

The 11 new conditionalities included approval of a new Rs 17.6 trillion worth budget for 2025-26 in line with IMF staff agreement to meet programme targets.

On the fiscal front, a new condition has also been imposed asking the Pakistani side to implement the new Agriculture Income Tax laws through a comprehensive plan, including the establishment 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 it is June this year.

According to the third new condition, the government will publish a governance action plan based on the recommendations of the Governance Diagnostic Assessment by the IMF.

According to the Express Tribune, the purpose of the report is to publicly identify reform measures to address critical governance vulnerabilities.
The subsequent condition states that the government will give annual inflation adjustment of the unconditional cash transfer programme to maintain people real purchasing power.

The IMF staff report also put a conditionality on Pakistan to prepare and publish a plan outlining the government’s post-2027 financial sector strategy, outlining the institutional and regulatory environment from 2028 onwards.

In the energy sector, four new conditions have been introduced, the Express Tribune report said.

Finally, on the trade, investment policy, and deregulation front, a conditionality has been set that it 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, the IMF has asked Pakistan 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 putting this condition is to liberalise trade and increase vehicle affordability.

On May 9, the IMF reviewed the Extended Fund Facility (EFF) lending programme (USD 1 billion) and also considered a fresh Resilience and Sustainability Facility (RSF) lending programme (USD 1.3 billion) for Pakistan.

Reportedly, the recent review approval brings disbursements to USD 2 billion within the USD 7 billion programme for Pakistan. (ANI)