Pakistan must comply with 11 new conditions set by the International Monetary Fund (IMF) to secure the upcoming tranche of its bailout package, raising the total number of required reforms under the programme to 50. The updated conditions were detailed in a Staff Level report published by the IMF on Saturday, as reported by a news outlet.&nbsp;
A central requirement involves the parliamentary endorsement of a Rs 17.6 trillion federal budget for the upcoming fiscal year. This includes Rs 1.07 trillion earmarked for development and a substantial rise in military spending. The IMF noted an increase of Rs 252 billion in the defence budget, bringing the total to Rs 2.414 trillion &mdash; a 12 per cent hike.&nbsp;
However, government sources indicate a planned allocation exceeding Rs 2.5 trillion, attributed to recent military escalations with India.
The IMF expressed concern that continued or worsening hostilities between Pakistan and India could threaten the fiscal, external, and structural reform goals of the programme. "Rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten risks to the fiscal, external and reform goals of the programme," the report stated.
Tensions intensified after the April 22 terror attack in Pahalgam, Jammu and Kashmir, which resulted in 26 deaths. In retaliation, India launched 'Operation Sindoor' on May 7, conducting precision airstrikes on militant targets in Pakistan. In response, Pakistan attempted strikes on Indian military facilities on May 8-10. Both nations reached an agreement on May 10 to end the hostilities following four days of drone and missile attacks across the border.
Despite the geopolitical strain, the IMF report observed limited market disruption. The stock exchange maintained most of its recent gains, and credit spreads widened only moderately.
Several of the new conditions focus on the energy sector. The government must notify revised annual electricity tariffs by July 1 to maintain pricing at cost recovery levels. Additionally, it must issue a notification for a semi-annual adjustment to gas tariffs by February 15, 2026.
Another energy-related requirement mandates the removal of the Rs 3.21 per unit ceiling on the debt servicing surcharge by the end of June. This is expected to raise electricity costs for compliant consumers. Parliament must also pass legislation to make the captive power levy ordinance permanent by the end of May, with the goal of compelling industries to transition from self-generated power to the national grid.
The IMF has also instructed the four provincial governments to enforce new agricultural income tax laws through a structured implementation plan. This includes setting up tax processing systems, identifying and registering taxpayers, launching a public awareness campaign, and improving compliance, all by a June deadline.
A further condition obliges the federal government to publish a governance action plan derived from the IMF&rsquo;s Governance Diagnostic Assessment. This plan is intended to pinpoint reforms needed to address governance weaknesses.
In addition, the government must release a forward-looking strategy for the financial sector, outlining the institutional and regulatory landscape from 2028 onwards. This post-2027 roadmap is to be made public as part of the IMF&rsquo;s structural benchmarks.
The IMF has also set a requirement for Pakistan to prepare a report, due by the end of 2025, outlining the phase-out of tax incentives granted to Special Technology Zones and other designated industrial parks. These incentives are to be fully withdrawn by 2035.
In a change aimed at benefiting consumers, the IMF has directed that Parliament be presented with legislation by July to lift restrictions on the import of used cars. The new policy would allow commercial imports of vehicles up to five years old, replacing the current limit of three years.
These new stipulations form part of Pakistan&rsquo;s broader commitment to the IMF programme as it seeks to stabilise its economy and continue accessing international financial assistance.
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Pakistan must meet 11 new IMF conditions, including budget approval and energy reforms, to secure bailout funds.

IMF Imposes 11 New Conditions on Pakistan Bailout

Pakistan must meet 11 new IMF conditions, including budget approval and energy reforms, to secure bailout funds.

May 18, 2025 | 13:28 IST