The International Monetary Fund (IMF) has added 11 stringent new conditions to Pakistan’s bailout programme, raising the total to 50, as part of the agreement for the next tranche of financial aid. These conditions, disclosed in the latest Staff Level report released Saturday, come amid rising geopolitical tensions with India, which the IMF warned could threaten the programme’s fiscal and reform objectives.

A key new requirement is the parliamentary approval of a Rs 17.6 trillion federal budget by June 2025. The IMF also demands that provinces enforce agricultural income tax laws through digital platforms and stricter compliance regimes by June 2024.

Amid surging defence spending — with Islamabad increasing its military budget to over Rs 2.5 trillion after recent cross-border hostilities — the IMF cautioned that the simmering conflict with India could impact Pakistan’s economic recovery. Notably, tensions spiked following India’s Operation Sindoor, a retaliatory strike against terror camps in Pakistan-occupied Kashmir on May 7, prompting limited Pakistani military responses until a ceasefire was reached on May 10.

New energy sector reforms include rebasing electricity tariffs by July 1, 2025, and implementing semi-annual gas price adjustments by February 2026. Pakistan must also remove the cap on debt service surcharge and make the captive power levy ordinance permanent to push industries toward the national grid.

The IMF further instructed the government to publish a post-2027 financial strategy, finalize a governance action plan, and phase out all tax incentives for Special Technology Zones by 2035.

In a pro-consumer move, the IMF directed Pakistan to lift import restrictions on used cars, allowing vehicles up to five years old to be imported by July, easing pressure on local supply and inflation.

These conditions reflect the IMF’s growing concern over Pakistan’s fragile economic and political environment.

The International Monetary Fund (IMF) has added 11 stringent new conditions to Pakistan’s bailout programme, raising the total to 50, as part of the agreement for the next tranche of financial aid. These conditions, disclosed in the latest Staff Level report released Saturday, come amid rising geopolitical tensions with India, which the IMF warned could threaten the programme’s fiscal and reform objectives.

A key new requirement is the parliamentary approval of a Rs 17.6 trillion federal budget by June 2025. The IMF also demands that provinces enforce agricultural income tax laws through digital platforms and stricter compliance regimes by June 2024.

Amid surging defence spending — with Islamabad increasing its military budget to over Rs 2.5 trillion after recent cross-border hostilities — the IMF cautioned that the simmering conflict with India could impact Pakistan’s economic recovery. Notably, tensions spiked following India’s Operation Sindoor, a retaliatory strike against terror camps in Pakistan-occupied Kashmir on May 7, prompting limited Pakistani military responses until a ceasefire was reached on May 10.

New energy sector reforms include rebasing electricity tariffs by July 1, 2025, and implementing semi-annual gas price adjustments by February 2026. Pakistan must also remove the cap on debt service surcharge and make the captive power levy ordinance permanent to push industries toward the national grid.

The IMF further instructed the government to publish a post-2027 financial strategy, finalize a governance action plan, and phase out all tax incentives for Special Technology Zones by 2035.

In a pro-consumer move, the IMF directed Pakistan to lift import restrictions on used cars, allowing vehicles up to five years old to be imported by July, easing pressure on local supply and inflation.

These conditions reflect the IMF’s growing concern over Pakistan’s fragile economic and political environment.