The International Monetary Fund (IMF) has imposed 11 new conditions on Pakistan before releasing the next tranche of its bailout programme, raising the total number of conditions to 50. The IMF warned that rising tensions between India and Pakistan could increase risks to Pakistan’s fiscal, external, and reform goals. Among the new conditions, Pakistan must secure parliamentary approval for a Rs 17.6 trillion budget for the fiscal year 2026, which includes Rs 1.07 trillion for development spending.
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The provinces are required to implement new Agricultural Income Tax laws by June this year, including setting up a system for tax returns and taxpayer registration. Pakistan must also publish a governance action plan based on IMF recommendations and a long-term financial sector strategy covering plans beyond 2027.
In the energy sector, the government must adjust electricity tariffs by July 2025 and gas tariffs by February 2026 to ensure cost recovery, make permanent the captive power levy ordinance by the end of this month, and remove the Rs 3.21 per unit cap on the debt servicing surcharge by June.
The IMF and World Bank criticized poor energy policies and governance for the growing circular debt problem. Additionally, Pakistan is required to phase out all incentives related to Special Technology Zones and industrial parks by 2035, with a plan due by the end of this year.
On a consumer-friendly note, the IMF has asked Pakistan to lift restrictions on importing used cars. The IMF report also highlighted recent cross-border conflict with India, including India’s “Operation Sindoor” following a terror attack in Pahalgam, and Pakistan’s retaliatory strikes in early May, which ended after an agreement on May 10 to cease hostilities. Pakistan’s defence budget for the next fiscal year has been increased by 12% to Rs 2.414 trillion, with government indications that it may rise to over Rs 2.5 trillion, an 18% increase, following the conflict. Overall, the IMF’s new conditions emphasize economic reforms, improved governance, and energy sector adjustments, while closely monitoring the impact of tensions with India on Pakistan’s bailout programme.
