Pakistan’s IMF bailout package comes with 64 conditions, including new taxes, subsidy cuts and anti-corruption measures, after the Shehbaz Sharif government missed key economic targets.
The International Monetary Fund (IMF) has imposed new conditions on Pakistan. (Representative Image)
There is no free lunch. No one can understand it better than Pakistan, which has been slapped with 64 conditions for the much-awaited $7 billion bailout package of the International Monetary Fund. Days after it approved the fresh tranche of $1.2 billion, the IMF announced 11 new conditions attached to the loan. All 64 conditions are to be fulfilled within 18 months. After missing 11 indicators, the Shehbaz Sharif government has agreed to comply with the fresh targets. These include additional tax measures, expenditure cuts, rising revenue shortfalls, and keeping the Extended Fund Facility (EFF) on track.
Pakistan IMF Loan
According to ‘Dawn,’ the Pakistan government accepted an estimated shortfall from the underperformance of the captive power levy of Rs 104 billion. It assured the international body to cover the shortfall by slashing the power subsidies. After the Federal Board of Revenue missed its collection target by Rs 430 billion, Finance Minister Muhammad Aurangzeb assured the IMF to cover a part of it by levying a new GST rate of 18%. He said, “Should FBR’s revenues continue to fall short of expectations in the second quarter of FY26 (end of current month), and if other tax revenues are insufficient to bridge the gap, we will—in consultation with IMF staff—increase federal excise duty (FED) on fertilisers and pesticides by five percentage points, introduce FED on high-value sugary items, and move items from the 8th GST schedule to the general GST regime.”
(Shehbaz Sharif government of Pakistan has missed certain IMF conditions.)
IMF 64 conditions for Pakistan loan
He added, “If by the end of the second quarter of FY26 there is a revenue shortfall due to the implementation of the National Tariff Policy, we will postpone an equivalent amount of expenditure until the last quarter of FY26.” The government missed one out of six qualitative performance criteria, five structural benchmarks, and four indicative targets. Some of these were subsequently met after the original deadlines or extended.
Pakistan’s economic crisis
The IMF has imposed new conditions on Pakistan, indicating rampant corruption in the system. It has asked Islamabad to declare the assets of senior federal civil servants; this may be extended to provincial officials. This condition has to be met within one year. It has also asked the cash-strapped country to tackle corruption across 10 high-risk departments and the strengthen the provincial anti-corruption units. It has asked it to submit an action plan for how it will achieve the target. Pakistan also has to complete a comprehensive assessment of remittance costs and cross-border payment barriers. The IMF has asked the South Asian economy to formulate a strategy for local-currency bond market reforms.
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