Daijiworld Media Network – Islamabad
Islamabad, May 18: The International Monetary Fund (IMF) has imposed 11 fresh conditions on Pakistan for the release of its next bailout tranche and warned that ongoing tensions with India could jeopardize the programme’s fiscal and reform objectives, The Express Tribune reported on Sunday.
Among the new conditions is the mandatory parliamentary approval of a Rs 17.6 trillion federal budget, along with an increase in the debt servicing surcharge on electricity bills. The IMF has also directed the lifting of curbs on importing used cars older than three years.
The IMF Staff Level report, released on Saturday, cautioned, “Rising tensions between India and Pakistan, if sustained or worsened, could heighten risks to the fiscal, external, and reform goals of the programme.” Despite the geopolitical strain, the market response remains modest, the report noted.
The Pakistan government is also under pressure to hike defence spending, with the next fiscal’s allocation pegged at Rs 2.414 trillion—a 12% rise. However, Islamabad is reportedly planning to go further, pushing the figure over Rs 2.5 trillion, citing confrontations with India earlier this month.
The escalation followed India's precision strikes under Operation Sindoor on May 7 targeting terrorist infrastructure in Pakistan in retaliation for the April 22 Pahalgam terror attack.
Pakistan responded with failed attempts to hit Indian military bases on May 8, 9, and 10. A ceasefire understanding was reached on May 10 after four days of intense conflict.
With the latest additions, Pakistan now faces 50 IMF conditions under the bailout framework. New fiscal mandates require provinces to implement Agriculture Income Tax laws through a centralized platform for taxpayer identification and compliance by June.
Other major stipulations include:
• Publishing a governance action plan based on IMF recommendations.
• Outlining a post-2027 financial sector strategy.
• Issuing annual electricity tariff notifications by July 1 and gas tariff adjustments by February 15, 2026.
• Making the captive power levy ordinance permanent by May-end.
• Removing the Rs 3.21 per unit cap on debt service surcharge by June-end.
The IMF further demanded the formulation of a plan by year-end to phase out all tax incentives related to Special Technology Zones and industrial parks by 2035.
In a move likely to benefit consumers, the IMF has also asked Pakistan to submit legislation by July-end to Parliament lifting restrictions on used car imports—initially allowing cars up to five years old.
The stringent conditions reflect IMF’s concerns over Pakistan’s economic management and geopolitical risks, especially amid fragile relations with India.