Pakistan has agreed to a fresh set of IMF Pakistan Conditions to secure the next $1.2 billion tranche under its ongoing financial program, signaling more reforms ahead for the economy.
The International Monetary Fund has placed 11 new requirements before approving the next installment of the $7 billion Extended Fund Facility. These conditions focus on energy pricing, governance reforms, tax administration, and investment policies.
The move comes ahead of the IMF Executive Board’s expected review next month, which will assess Pakistan’s economic progress and decide on the fund release.
Key reforms target energy, taxes, and governance
One of the major commitments involves changes in energy pricing. The government plans to introduce semi-annual gas tariff adjustments starting July 2026 and annual electricity tariff revisions from January 2027. This indicates likely increases in utility costs in the coming fiscal year.
In the public sector, Pakistan has agreed to revise procurement rules. The goal is to end preferential treatment for state-owned enterprises and ensure open competition in government contracts.
The IMF conditions also extend to tax reforms. The Federal Board of Revenue will introduce a centralized system to select tax audit cases. This step aims to improve transparency and address ongoing revenue shortfalls.
Pakistan is struggling to meet its revised tax target of Rs13.97 trillion for the current fiscal year, making reforms in this area critical.
Changes in investment policies and incentives
Another major shift involves Special Economic Zones (SEZs) and Special Technology Zones. The government plans to gradually withdraw tax incentives linked to these zones.
Authorities will move from profit-based incentives to cost-based support, with a complete phase-out targeted by 2035. This includes incentives previously granted under major development projects.
Social spending and institutional reforms
Despite fiscal tightening, Pakistan has committed to increasing social support. The Benazir Income Support Programme stipend will rise from Rs14,500 to Rs19,500 by January 2027, requiring higher budget allocation.
On governance, reforms will include changes to accountability laws. A merit-based selection process for key appointments is expected to improve institutional transparency.
The State Bank of Pakistan will also prepare a roadmap to gradually ease foreign exchange restrictions, which could impact currency market dynamics.
