As Pakistan navigates its economic challenges, the government faces strict conditions from the International Monetary Fund (IMF) to secure financial support.
With a $1 billion bailout hanging in the balance, the country must meet 11 additional requirements set by the IMF to stabilize its economy.
These conditions, spanning various sectors, are designed to guarantee fiscal discipline and structural reforms, though they pose significant hurdles for the government amidst ongoing tensions with neighboring India.
One of the key demands is the parliamentary approval of a massive Rs17.6 trillion federal budget for the fiscal year 2025-26 by June 2025.
This budget, which includes Rs1.07 trillion for development spending, must align with the IMF’s strict program targets to guarantee economic stability.
Additionally, the government is tasked with implementing new Agricultural Income Tax laws by the same deadline, alongside a thorough plan to identify and register taxpayers.
These measures, aimed at boosting agricultural productivity, could have a big impact on rural areas where farming is a primary source of income.
Beyond fiscal reforms, the IMF has set clear deadlines for governance improvements.
By October 2025, Pakistan must publish a detailed governance action plan to address vulnerabilities, guided by the IMF’s diagnostic assessment.
This plan is expected to enhance transparency and accountability within the government, tackling long-standing issues that have hindered progress.
“Meeting these governance targets is critical for rebuilding trust in public institutions,” an IMF spokesperson noted, emphasizing the importance of these reforms for the bailout package.
The energy sector isn’t spared from scrutiny either, with specific mandates to ensure sustainability.
The IMF requires annual electricity tariff rebasing by July 1, 2025, and semi-annual gas tariff adjustments starting February 15, 2026, guaranteeing tariffs reach cost recovery levels.
Regulatory changes are also mandated to improve the investment environment in this sector.
Meanwhile, in trade and investment policies, restrictions on used motor vehicle imports must be lifted by July 2025, a move to liberalize trade and make vehicles more affordable for citizens.
Incentives for special technology zones and industrial parks are to be phased out by 2035, signaling a shift toward broader economic competitiveness.
Looking ahead, the government must prepare a financial sector strategy for post-2027 by June 2026, while also making annual inflation adjustments to cash transfer programs starting January 2026.
These steps aim to protect vulnerable populations amidst rising prices.
Additionally, the government is required to make the Captive Power Levy Ordinance permanent by the end of May 2025 to encourage industrial energy use on the national grid Captive Power Levy.
The IMF’s conditions also include passing legislation to remove the Rs3.21 per unit cap on debt service surcharge by June 2025 to address power sector inefficiencies debt service surcharge.
The IMF’s conditions, though tough, are seen as necessary to facilitate high-impact private investment and accelerate structural reforms.
As one economic analyst put it, “Pakistan’s ability to meet these deadlines will determine whether it can secure the much-needed financial lifeline.”
With multiple deadlines looming between 2025 and 2035, the government faces a tight schedule to comply.
The stakes are high, and the coming months will test Pakistan’s commitment to these rigorous demands as it endeavors to stabilize its economy and secure the IMF’s support.