IMF Imposes 11 New Conditions on Pakistan Amid Rising Regional Tensions

The International Monetary Fund (IMF) has introduced 11 additional conditions for Pakistan to fulfill in order to access the next tranche of its ongoing $7 billion bailout program. This development follows the IMF’s first review under the Extended Fund Facility (EFF) arrangement, completed on May 9, 2025. The new conditions aim to ensure fiscal discipline and structural reforms in Pakistan’s economy.

Key Conditions Imposed:

1. Parliamentary Approval of Budget: Pakistan must secure parliamentary approval for the fiscal year 2025–26 budget, aligning with IMF targets by end-June 2025.
2. Tax Reforms: Implementation of agricultural income tax laws across provinces, including establishing platforms for processing returns and improving compliance.
3. Energy Sector Adjustments: Increase in the debt servicing surcharge on electricity bills to address circular debt issues.
4. Import Policy Changes: Lifting restrictions on the import of used cars older than three years to liberalize trade.
5. Privatization Efforts: Advancement in the privatization of state-owned enterprises to enhance efficiency and reduce fiscal burden.

IMF’s Concerns Over Regional Stability:

The IMF has expressed concerns that escalating tensions between Pakistan and India could jeopardize the success of the reform program. The Fund warned that sustained or deteriorating relations might heighten risks to Pakistan’s fiscal and external stability, potentially undermining the objectives of the bailout package.

Economic Outlook:

Despite the challenges, Pakistan’s financial and external conditions have shown signs of improvement, with a current account surplus in the first eight months of FY25 and reserves exceeding program projections. Inflation has recently declined, although core inflation remains elevated. The economic recovery is ongoing, albeit with growth in the first half of FY25 being somewhat lower than anticipated.

Conclusion:

The IMF’s additional conditions underscore the importance of structural reforms and fiscal discipline in stabilizing Pakistan’s economy. Adherence to these conditions is crucial for the continuation of financial support and for fostering long-term economic resilience.

Note: This article is based on publicly available information from the IMF and reputable news sources as of May 19, 2025.