The International Monetary Fund (IMF) has introduced 11 new conditionalities for Pakistan as part of the requirements to release the next tranche of its bailout programme, according to Pakistan’s Express Tribune. The IMF’s staff report highlights that rising tensions between India and Pakistan could jeopardize fiscal, external, and reform objectives of the programme.
Key conditionalities include the approval of a new Rs 17.6 trillion budget for 2025-26 aligned with IMF targets. Pakistan must also implement Agriculture Income Tax laws through a comprehensive plan involving taxpayer identification, registration, and compliance strategies, with a deadline of June 2025. Additionally, the government is required to publish a governance action plan based on the IMF’s Governance Diagnostic Assessment to address critical governance weaknesses.
The programme mandates annual inflation adjustments for the unconditional cash transfer programme to maintain real purchasing power. Pakistan is also tasked with preparing and publishing a post-2027 financial sector strategy outlining the regulatory frameworks beyond 2028.
On the energy front, four new conditions have been introduced, though details were not fully disclosed. The IMF has also asked Pakistan to prepare a plan to phase out all incentives related to Special Technology Zones and industrial parks by 2035 to promote deregulation and trade liberalization.
Finally, Pakistan must submit legislation to Parliament for removing quantitative restrictions on the import of used motor vehicles (initially under five years old) by the end of July, aiming to liberalize trade and improve vehicle affordability.
The IMF recently reviewed Pakistan’s Extended Fund Facility (EFF) programme amounting to USD 1 billion, alongside consideration of a new Resilience and Sustainability Facility (RSF) programme of USD 1.3 billion. The latest review approval has released USD 2 billion of the total USD 7 billion bailout package.
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