Overview
The International Monetary Fund (IMF) has outlined 11 new conditions for Pakistan to meet to access the remaining funds under its $7 billion loan program, as detailed in the IMF staff report released on Saturday.
Federal Budget Approval
- Requirement: Secure parliamentary approval for the FY2026 federal budget.
- Details:
- Total outlay: Rs. 17.6 trillion
- Interest payments: Rs. 8.7 trillion
- Primary surplus: Rs. 2.1 trillion
- Overall deficit: Rs. 6.6 trillion
- Development spending: Rs. 1.07 trillion
Defence Budget
- IMF Allocation: Rs. 2.414 trillion for FY2026, a 12% increase (Rs. 252 billion) from the previous year.
- Government Plan: Over Rs. 2.5 trillion, citing India’s recent military aggression.
- IMF Warning: Persistent or escalating India-Pakistan tensions could jeopardize fiscal, external, and reform targets.
Energy Sector Reforms
- Electricity Tariffs:
- Annual rebasing by July 1 to ensure full cost recovery.
- Remove Rs. 3.21 per unit cap on debt servicing surcharge by June via legislation.
- Adopt a permanent law for the captive power levy by May.
- Gas Tariffs: Semi-annual adjustments by February 15, 2026, for cost recovery.
Agriculture Income Tax
- Requirement: All provinces must implement agriculture income tax.
- Deadline: June.
Trade Liberalization
- Used Car Imports:
- Submit legislation by July to lift all quantitative restrictions on commercial imports of used vehicles (up to five years old).
- Purpose: Support trade liberalization and improve car affordability.
Governance and Financial Reforms
- Governance Reform Plan: Publish a plan based on IMF assessments.
- Cash Transfers: Index benefits to inflation annually.
- Financial Sector Strategy: Prepare a post-2027 strategy detailing institutional and regulatory reforms starting in 2028.
Tax Incentive Phase-Out
- Requirement: Develop a plan by year-end to eliminate all tax incentives for Special Technology Zones and industrial parks by 2035.