• Source:JND

The International Monetary Fund has imposed 11 additional conditions on Pakistan under its ongoing USD 7-billion bailout programme, tightening scrutiny over governance, corruption, and structural reforms. The new measures, outlined in the IMF’s latest staff-level report for the second review, raise the total number of required actions to 64 over 18 months, one of the most stringent sets of conditions Pakistan has ever faced.

The IMF cleared fresh disbursements of about USD 1 billion under the Extended Fund Facility (EFF) and roughly USD 200 million through the Resilience and Sustainability Facility (RSF). But its approval came with a pointed reminder that Islamabad remains under strict monitoring and must deliver on overdue reforms to avoid backtracking. The Fund also granted a waiver for non-observance of one performance criterion, reflecting concerns about compliance gaps.

Crackdown On Corruption And Governance Fault Lines

The Fund has emphasised the urgent need for transparency across Pakistan’s federal structures. One of the conditions requires the government to publish asset declarations of top civil servants by December next year. Banks are expected to receive full access to these disclosures to detect discrepancies between reported income and assets. Islamabad also plans to extend this requirement to senior provincial officials.

The IMF has directed Pakistan to release by October a detailed action plan to tackle corruption vulnerabilities in 10 government departments identified as high-risk. The National Accountability Bureau will coordinate the reforms, while provincial anti-corruption units are expected to expand their investigative roles based on financial intelligence inputs.

Pressure On Economic Reforms And Debt Stability

Despite reporting a primary fiscal surplus of 1.3 percent of GDP for FY25, the IMF cautioned that Pakistan’s gains remain fragile. Inflation has climbed again, partly due to the impact of recent floods on food prices, adding stress to households already grappling with high living costs. Public debt continues to hover above USD 307 billion, with a significant portion owed to external creditors, including the IMF.

The Fund warned that policy slippages, weak institutions and repeated shocks continue to expose the economy to serious vulnerability. Pakistan has returned to the IMF more than 20 times since the late 1980s, a pattern the Fund says underscores deep-rooted structural flaws.

Sectoral Reforms From Power To Payments

The IMF has also instructed Islamabad to submit a full review of foreign remittance costs and barriers affecting cross-border payments by May next year. The review is crucial as rising remittance costs could exceed USD 1.5 billion in the coming years. In an attempt to dismantle entrenched interests, the lender wants a national policy to liberalise Pakistan’s powerful sugar industry by June. Reforms in the bond market, corporate governance laws, and the Federal Board of Revenue’s efficiency have also been prioritised.

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The potential measures include higher excise duties on fertilisers, pesticides, and high-value sugary items, and widening the sales tax base. While Pakistan’s foreign exchange reserves have risen to USD 14.5 billion, the IMF said the buffer remains insufficient and must be strengthened through disciplined macroeconomic management.

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The Fund’s latest assessment reinforces concerns that Pakistan’s economic challenges are far from resolved. Sustained reforms, strict oversight, and unwavering political commitment, it said, will determine whether the bailout leads to lasting stability or yet another cycle of financial distress.

With inputs from agency.


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