IMF slaps 11 more conditions on Pakistan, flags tensions wit
IMF slaps 11 more conditions on Pakistan, flags tensions with India as big risk
The International Monetary Fund (IMF) has slapped 11 new conditions on Pakistan for the $ 7 billion lifeline that it has extended and also flagged the rising tensions with India
NEW DELHI — The International Monetary Fund (IMF) has slapped 11 new
conditions on Pakistan for the $ 7 billion lifeline that it has extended and
also flagged the rising tensions with India as a huge risk for the
cash-strapped country.
The new conditions that have been imposed include approval
of a new Rs 17.6 lakh crore budget, increasing debt servicing surcharge on
electricity bills and lifting restrictions on the import of more than
three-year-old used cars, according to a report in Pakistani newspaper Express
Tribune.
The Staff Level report, which the IMF released on Saturday,
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".
The report further stated that tensions between Pakistan and
India have risen significantly over the past two weeks but so far the market
reaction has been modest with the stock market retaining most of its recent
gains and spreads widening moderately.
The IMF has shown Pakistan's defence budget for the next
fiscal year at Rs 2.414 lakh crore, which represents an increase of Rs 25,200
crore or 12 per cent. Compared to the IMF's projection, the government has
indicated allocating over Rs 2.5 lakh crore, which is an 18 per cent increase
after the conflict with India.
The IMF has also imposed a new condition of securing
parliamentary approval of the fiscal year 2026 budget in line with the IMF
staff agreement to meet programme targets by end-June 2025.
“The report revealed that the IMF has slapped 11 more
conditions on Pakistan for the sake of just $7 billion lending, taking the
total conditions to 50,” the Express Tribune report states.
The IMF has shown the total size of the federal budget at Rs
17.6 trillion, including Rs 1.07 lakh crore for the development spending with
an overall deficit of Rs 6.6 lakh crore.
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, including the establishment of an operational
platform for processing returns, taxpayer identification and registration, a
communication campaign, and a compliance improvement plan. The deadline for the
provinces 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. The purpose of the report is to publicly
identify reform measures to address critical governance vulnerabilities.
The fourth new condition states that the government will
give annual inflation adjustment of the unconditional cash transfer programme
to maintain people’s real purchasing power.
Another new condition states 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.
In the energy sector, four new conditions have been
introduced. The government will issue notifications of the annual electricity
tariff rebasing by July 1st of this year to maintain energy tariffs at cost
recovery levels.
It will also issue a notification of the semi-annual gas
tariff adjustment to maintain energy tariffs at cost recovery levels by
February 15, 2026, according to the report.
Parliament will also adopt legislation to make captive power
levy ordinance permanent by the end of this month, according to the IMF. The
government has increased the cost for the industries to force them to shift to
the national electricity grid.
