Islamabad:
The International Monetary Fund (IMF) has slapped 11 new conditions in Pakistan, including the approval of a new budget of RS17.6 billion value, increasing the surcharge of debt service in electricity invoices and the import elevation restrictions of the imported cars of more than three years.
The personnel report, which the IMF published on Saturday, also said that “the increase in tensions between India and Pakistan, if they are maintained or deteriorated even more, could increase the risks for the fiscal, external and reform objectives of the program.”
The report also declared that tensions between Pakistan and India have increased significantly in the last two weeks, but so far the market reaction has been modest with the stock market that retains most of its recent and differential profits that are moderate moderately.
The IMF has shown the defense budget for the next fiscal year at RS2.414 billion, which is higher in RS252 billion or 12%. Compared to the IMF projection, the Government has indicated to assign more than RS2.5 billion or a 18% higher budget after the naked aggression of India.
The report revealed that the IMF has slapped 11 more conditions in Pakistan for only $ 7 billion of loans, taking the total conditions to 50.
He has imposed a new condition to ensure “the parliamentary approval of the Fiscal Year 2026 in line with the IMF personnel agreement to meet the objectives of the program at the end of June 2025”.
The IMF has demonstrated the total size of the federal budget at RS17.6 billion, including RS1.07 billion for development spending. The Express PAkGazette had reported a few days ago that the Government would present more than RS17.5 billion budget.
The IMF has shown an expense in interest in RS8.7 billion, the primary budget surplus of RS2.1 billion and the general deficit in RS6.6 billion.
A new condition has also been imposed on the provinces in which the four federal units will implement the new laws on agricultural income taxes through a comprehensive plan, including the establishment of an operational platform for the processing of yields, identification and registration of taxpayers, a communication campaign and a compliance improvement plan. The deadline for the provinces is June of this year.
According to the third new condition, the Government will publish a government action plan based on the recommendations of the Governance Diagnosis Evaluation by the IMF. The purpose of the report is to publicly identify reform measures to address critical governance vulnerabilities.
The fourth new condition establishes that the Government will provide an annual inflation adjustment of the unconditional cash transfer program to keep the purchasing power of people
Another new condition establishes that the Government will prepare and publish a plan that describes the strategy of the financial sector after the government of the Government, describing 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 relocation of the electricity rate before July 1 of this year to maintain energy tariffs at cost recovery levels.
It will also issue a notification of the semiannual adjustment of the gas rate to maintain energy tariffs at cost recovery levels before February 15, 2026, according to the report.
Parliament will also adopt legislation to make the captive power tax ordinance permanent for the end of this month, according to the IMF. The Government has increased the cost of industries to force them to change to the national electricity network.
The Parliament will also adopt legislation to eliminate the maximum RS3.21 per unit of the debt service surcharge, which is equivalent to punishing honest electricity consumers to pay the inefficiency of the electricity sector. The IMF and the World Bank dictated that incorrect energy policies are causing the accumulation of circular debt in addition to government bad governance. The deadline to delete the lid is at the end of June, according to the report.
The IMF has also imposed a condition that Pakistan prepares a plan based on the evaluation carried out to completely eliminate all incentives in relation to special technological zones and other parks and industrial areas by 2035. The report must be prepared for the end of this year.
In a consumer friendly condition, the IMF has asked Pakistan to submit to Parliament, all the legislation required to raise all quantitative restrictions in the commercial import of used motor vehicles (initially only for vehicles under five years at the end of July.
Currently, only cars can be imported up to three years and there are many non -tariff barriers to discourage import. The purpose of lifting these restrictions is to liberalize trade and increase the affordability of the vehicle, said the IMF.
In addition to imposing new conditions, the IMF has also made adjustments in the above conditions.
Program implementation
The IMF has extended the deadlines of four conditions whose implementation had been delayed. The lender said that the Government complied with the seven quantitative performance criteria by the end of December 2024. These were floors in the Net International Reserves of the SBP; directed cash transfer; The number of new tax declarations of the new filingers, the ceilings in the net net assets of the SBP; SBP FX exchanges; the primary budget deficit of the general government; and government guarantees.
Most of the indicative objectives were met at the end of December, including ceilings in the provincial primary budget deficit added; Net accumulation of tax refund arrears; and payment arrears of the electricity sector; the floors of the income collected by the provincial income authorities; and the weighted average expiration of local monetary debt values. However, conditions on government health and education; Net fiscal income collected by the FBR; And the net income collected from the retailers under the Tajir Dost scheme was lost, said the IMF.
The respective governments also complied with nine structural reference points, even with the approval of a national fiscal pact, improving the safeguards for monetary policy operations and the approval of amendments to the bank resolution and deposit legislation.
But the structural reference point on the provincial legislation of Agricultural Income Tax was not fulfilled at the end of October, but this legislation was subsequently approved in February 2025. Another two structural reference points were lost due to delays in the approval amendments of the officials and the acts of the Wealth Fund of Wealth (SWF).
Two SBs related to the resolution of subcapitized banks and captive energy producers were lost, but subsequent political actions are expected to achieve the underlying objectives, the IMF said.
