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Mint
24-05-2025
- Business
- Mint
Pakistan funding review expected in second half of 2025 amid 11 new conditions for IMF bailout
The International Monetary Fund (IMF) is expected to conduct the next funding review for Pakistan in the latter half of 2025 and stated that it will maintain ongoing discussions with Pakistani authorities to reach an agreement on the 2026 fiscal year budget terms, according to an official release. Reuters reported citing an official statement, 'the IMF's priority remains to anchor inflation within the central bank's medium-term target range of 5–7 per cent.' The statement further noted that the Pakistani authorities reaffirmed their commitment to fiscal consolidation while aiming for a primary surplus of 1.6 per cent of GDP in FY2026, Reuters reported. Meanwhile, IMF staff concluded visit to Pakistan, and the statement noted that priority remains maintaining tight monetary policy to ensure inflation is anchored within the Pakistan Central Bank's medium-term target range of 7%, as reported by Reuters. Earlier on Friday, India said it is 'thankful' for the 11 additional conditions imposed by the International Monetary Fund (IMF) on Pakistan while clarifying that it is not opposed to financial assistance meant for genuine developmental purposes. At the same time, it raised serious concerns over the timing of the recent bailout package, suggesting that the funds may have indirectly supported Pakistan's rising defence spending. "We are thankful for the additional 11 conditions imposed by the IMF on Pakistan. However, we are not against any financial assistance provided for genuine developmental agendas. We have raised questions regarding the timing of the recent bailout package given to Pakistan by the IMF," government sources told ANI. The IMF staff report, released on Saturday, warned, 'Rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten risks to the fiscal, external and reform goals of the programme.' It added that overall risks to the programme had increased. According to a report by the Pakistan-based Express Tribune, the IMF has imposed 11 new conditions on Pakistan for the release of the next tranche of its bailout package, aimed at stabilizing the country's struggling economy. Among them is the approval of a ₹ 17.6 trillion budget for the 2025–26 financial year, aligned with IMF targets. One major condition involves implementing new Agriculture Income Tax laws, which include establishing systems for return filing, taxpayer registration, communication campaigns, and a compliance framework—all to be completed by June 2025, ANI reported. Another requirement is the publication of a governance action plan based on findings from the IMF's Governance Diagnostic Assessment. The IMF has also asked Pakistan to develop and publish a financial sector strategy outlining its institutional and regulatory roadmap from 2028 onward. The IMF's priority remains to anchor inflation within the central bank's medium-term target range of 5–7 per cent. These conditions follow the IMF's May 9 review of a $1 billion Extended Fund Facility (EFF) and consideration of a new $1.3 billion Resilience and Sustainability Facility (RSF), bringing total disbursements under the $7 billion program to $2 billion so far. (With inputs from agencies)
India Gazette
23-05-2025
- Business
- India Gazette
India thanks IMF for imposing 11 conditions on Pakistan, but questions timing of bailout: Sources
New Delhi [India], May 23 (ANI): India has said it is 'thankful' for the 11 additional conditions imposed by the International Monetary Fund (IMF) on Pakistan, while clarifying that it is not opposed to financial assistance meant for genuine developmental purposes. At the same time, it raised serious concerns over the timing of the recent bailout package, suggesting that the funds may have indirectly supported Pakistan's rising defence spending. 'We are thankful for the additional 11 conditions imposed by the IMF on Pakistan. However, we are not against any financial assistance provided for genuine developmental agendas. We have raised questions regarding the timing of the recent bailout package given to Pakistan by the IMF,' government sources said. 'All these arms and ammunition are then used by Pakistan against India,' the sources added, citing IMF data. Sources, also citing public data, told ANI that, 'Pakistan spends on average around 18 per cent of its general budget on defence affairs and services, while even conflict-affected countries spend far less, averaging 10-14 per cent of their general budget expenditure. Furthermore, Pakistan's arms imports increased dramatically from 1980 to 2023, by over 20 per cent on average in the years when it received IMF disbursements compared to years when it did not.' Meanwhile, Indian multi-party delegations are visiting various countries to expose Pakistan's support for terrorism and highlight India's zero-tolerance policy towards it. According to a report by Pakistan-based Express Tribune, the IMF has placed 11 new conditions on Pakistan for the release of the next tranche of the bailout package meant for its struggling economy. The IMF staff report, released on Saturday, warned, 'Rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten risks to the fiscal, external and reform goals of the programme.' It added that overall risks to the programme had increased. Among the conditions is the approval of a Rs 17.6 trillion budget for the financial year 2025-26, in line with IMF targets. Another condition asks Pakistan to implement new Agriculture Income Tax laws. This includes setting up systems for return filing, taxpayer registration, communication efforts, and a compliance plan. The deadline for this is June 2025. A third condition requires the publication of a governance action plan based on the IMF's Governance Diagnostic Assessment. The IMF also wants Pakistan to prepare and publish a financial sector strategy for the period after 2027, outlining its institutional and regulatory plans from 2028 onwards. On May 9, the IMF completed its review of the USD 1 billion Extended Fund Facility (EFF) and also considered a new USD 1.3 billion Resilience and Sustainability Facility (RSF). This brings total disbursements under the USD seven billion programme to USD two billion so far. (ANI)
Business Recorder
19-05-2025
- Business
- Business Recorder
IMF sets 11 new structural benchmarks for Pakistan under $7bn EFF
ISLAMABAD: The International Monetary Fund (IMF) has set eleven new structural benchmarks (SBs) for the ongoing $7 billion Extended Fund Facility (EFF) programme including the parliamentary approval of a fiscal year 2026 budget in line with the Fund staff agreement to meet programme targets. The Fund in its latest report 'First review under the Extended Fund Facility (EFF) arrangement, requests for modification of performance criteria, and request for an arrangement under the Resilience and Sustainanble Facility (RSF)', noted that 11 new SBs have been set. The SBs on fiscal side include: (i) parliamentary approval of fiscal year 2026 budget in line with IMF staff agreement to meet program targets and ensure achievement of fiscal objectives (end-June 2025), (ii) implement the new Agriculture Income Tax laws through a comprehensive plan, including the establishment of an operational platform for processing returns, taxpayer identification and registration, a communication campaign, and a compliance improvement plan to protect tax revenue (end-June 2025). Pakistan meets all 7 QPCs, 5 of 8 ITs and SBs: IMF says policy efforts continue to bear fruit On governance side (i) publish governance action plan based on the recommendations of the Governance Diagnostic Assessment with the rationale to publicly identify reform measures to address critical governance vulnerabilities (end-October 2025). On social side (i) annual inflation adjustment of the unconditional cash transfer (Kafaalat) program to maintain UCT real purchasing power (end-January 2026). On monetary and financial side (i) prepare and publish a plan outlining the government's post-2027 financial sector strategy, outlining the institutional and regulatory environment from 2028 onwards to safeguard financial stability (end-June 2026). On energy sector (i) notifications of the annual electricity tariff rebasing and gas tariff adjustment to maintain energy tariffs at cost recovery levels (July 1, 2025), (ii) notification of the semi-annual gas tariff adjustment to maintain energy tariffs at cost recovery levels (February 15, 2026), (iii) adopt legislation to make captive power levy ordinance permanent to promote uptake of electricity grid usage and incentivize more efficient use of energy sources (end-May 2025), (iv) adopt legislation to remove the cap on the debt service surcharge to ensure adequate financing is available for CD conversion operation (end-June 2025). On trade, investment policy, and deregulation side (i) prepare a plan based on the assessment conducted to fully phase out all incentives in relation to Special Technology Zones and other industrial parks and zones by 2035 to improve efficiency and provide a level playing field for investment (end-December 2025), and (ii) submit to parliament all required legislation for lifting all quantitative restrictions on the commercial importation of used motor vehicles (initially only for vehicles less than five years old, subject to meeting minimum environmental and safety standards) to liberalize trade and increase vehicle affordability (end-July 2025). The report noted the authorities met all seven quantitative performance criteria (PCs) for end-December 2024: the floors on (i) net international reserves of the SBP; (ii) targeted cash transfer spending; and (iii) the number of new tax returns from new filers; and the ceilings on (iv) net domestic assets of the SBP; (v) the SBP's FX swap/forward book; (vi) the general government primary budget deficit; and (vii) government guarantees. They also met both continuous PCs on (i) zero new flow of SBP credit to the government; and (ii) zero external public payment arrears. The majority of Indicative targets (ITs) were met at end-December, including the ceilings on: (i) the aggregate provincial primary budget deficit; (ii) net accumulation of tax refund arrears; and (iii) power sector payment arrears; and the floors on (iv) revenues collected by provincial revenue authorities; and (v) the weighted average maturity of local currency debt securities. However, the ITs at end-December were missed for the floors on (i) government health and education spending; (ii) net tax revenues collected by the FBR; and (iii) net tax revenues collected from retailers under the Tajir Dost scheme. Nine SBs were met, including on approval of a National Fiscal Pact, improving safeguards for monetary policy operations and approval of amendments to bank resolution and deposit legislation. Three continuous SBs on not granting tax amnesties, seeking ex-ante parliamentary approval for any non-budgeted expenditures, and the maximum average premium between the interbank and open market rates were also met. The SB on provincial AIT legislation was not met at end-October, but this legislation was subsequently passed in February 2025, while another two SBs were missed due to delays in passing amendments to of the Civil Servants and Sovereign Wealth Fund (SWF) Acts, respectively. Finally, two SBs relating to resolving undercapitalized banks and to captive power producers were missed, but subsequent policy actions are expected to accomplish the underlying objectives. Copyright Business Recorder, 2025
Business Recorder
19-05-2025
- Business
- Business Recorder
IMF sets 11 new structural benchmarks under $7bn EFF
ISLAMABAD: The International Monetary Fund (IMF) has set eleven new structural benchmarks (SBs) for the ongoing $7 billion Extended Fund Facility (EFF) programme including the parliamentary approval of a fiscal year 2026 budget in line with the Fund staff agreement to meet programme targets. The Fund in its latest report 'First review under the Extended Fund Facility (EFF) arrangement, requests for modification of performance criteria, and request for an arrangement under the Resilience and Sustainanble Facility (RSF)', noted that 11 new SBs have been set. The SBs on fiscal side include: (i) parliamentary approval of fiscal year 2026 budget in line with IMF staff agreement to meet program targets and ensure achievement of fiscal objectives (end-June 2025), (ii) implement the new Agriculture Income Tax laws through a comprehensive plan, including the establishment of an operational platform for processing returns, taxpayer identification and registration, a communication campaign, and a compliance improvement plan to protect tax revenue (end-June 2025). Pakistan meets all 7 QPCs, 5 of 8 ITs and SBs: IMF says policy efforts continue to bear fruit On governance side (i) publish governance action plan based on the recommendations of the Governance Diagnostic Assessment with the rationale to publicly identify reform measures to address critical governance vulnerabilities (end-October 2025). On social side (i) annual inflation adjustment of the unconditional cash transfer (Kafaalat) program to maintain UCT real purchasing power (end-January 2026). On monetary and financial side (i) prepare and publish a plan outlining the government's post-2027 financial sector strategy, outlining the institutional and regulatory environment from 2028 onwards to safeguard financial stability (end-June 2026). On energy sector (i) notifications of the annual electricity tariff rebasing and gas tariff adjustment to maintain energy tariffs at cost recovery levels (July 1, 2025), (ii) notification of the semi-annual gas tariff adjustment to maintain energy tariffs at cost recovery levels (February 15, 2026), (iii) adopt legislation to make captive power levy ordinance permanent to promote uptake of electricity grid usage and incentivize more efficient use of energy sources (end-May 2025), (iv) adopt legislation to remove the cap on the debt service surcharge to ensure adequate financing is available for CD conversion operation (end-June 2025). On trade, investment policy, and deregulation side (i) prepare a plan based on the assessment conducted to fully phase out all incentives in relation to Special Technology Zones and other industrial parks and zones by 2035 to improve efficiency and provide a level playing field for investment (end-December 2025), and (ii) submit to parliament all required legislation for lifting all quantitative restrictions on the commercial importation of used motor vehicles (initially only for vehicles less than five years old, subject to meeting minimum environmental and safety standards) to liberalize trade and increase vehicle affordability (end-July 2025). The report noted the authorities met all seven quantitative performance criteria (PCs) for end-December 2024: the floors on (i) net international reserves of the SBP; (ii) targeted cash transfer spending; and (iii) the number of new tax returns from new filers; and the ceilings on (iv) net domestic assets of the SBP; (v) the SBP's FX swap/forward book; (vi) the general government primary budget deficit; and (vii) government guarantees. They also met both continuous PCs on (i) zero new flow of SBP credit to the government; and (ii) zero external public payment arrears. The majority of Indicative targets (ITs) were met at end-December, including the ceilings on: (i) the aggregate provincial primary budget deficit; (ii) net accumulation of tax refund arrears; and (iii) power sector payment arrears; and the floors on (iv) revenues collected by provincial revenue authorities; and (v) the weighted average maturity of local currency debt securities. However, the ITs at end-December were missed for the floors on (i) government health and education spending; (ii) net tax revenues collected by the FBR; and (iii) net tax revenues collected from retailers under the Tajir Dost scheme. Nine SBs were met, including on approval of a National Fiscal Pact, improving safeguards for monetary policy operations and approval of amendments to bank resolution and deposit legislation. Three continuous SBs on not granting tax amnesties, seeking ex-ante parliamentary approval for any non-budgeted expenditures, and the maximum average premium between the interbank and open market rates were also met. The SB on provincial AIT legislation was not met at end-October, but this legislation was subsequently passed in February 2025, while another two SBs were missed due to delays in passing amendments to of the Civil Servants and Sovereign Wealth Fund (SWF) Acts, respectively. Finally, two SBs relating to resolving undercapitalized banks and to captive power producers were missed, but subsequent policy actions are expected to accomplish the underlying objectives. Copyright Business Recorder, 2025
Business Recorder
19-05-2025
- Business
- Business Recorder
IMF sets 11 new SBs under $7bn EFF
ISLAMABAD: The International Monetary Fund (IMF) has set eleven new structural benchmarks (SBs) for the ongoing $7 billion Extended Fund Facility (EFF) programme including the parliamentary approval of a fiscal year 2026 budget in line with the Fund staff agreement to meet programme targets. The Fund in its latest report 'First review under the Extended Fund Facility (EFF) arrangement, requests for modification of performance criteria, and request for an arrangement under the Resilience and Sustainanble Facility (RSF)', noted that 11 new SBs have been set. The SBs on fiscal side include: (i) parliamentary approval of fiscal year 2026 budget in line with IMF staff agreement to meet program targets and ensure achievement of fiscal objectives (end-June 2025), (ii) implement the new Agriculture Income Tax laws through a comprehensive plan, including the establishment of an operational platform for processing returns, taxpayer identification and registration, a communication campaign, and a compliance improvement plan to protect tax revenue (end-June 2025). Pakistan meets all 7 QPCs, 5 of 8 ITs and SBs: IMF says policy efforts continue to bear fruit On governance side (i) publish governance action plan based on the recommendations of the Governance Diagnostic Assessment with the rationale to publicly identify reform measures to address critical governance vulnerabilities (end-October 2025). On social side (i) annual inflation adjustment of the unconditional cash transfer (Kafaalat) program to maintain UCT real purchasing power (end-January 2026). On monetary and financial side (i) prepare and publish a plan outlining the government's post-2027 financial sector strategy, outlining the institutional and regulatory environment from 2028 onwards to safeguard financial stability (end-June 2026). On energy sector (i) notifications of the annual electricity tariff rebasing and gas tariff adjustment to maintain energy tariffs at cost recovery levels (July 1, 2025), (ii) notification of the semi-annual gas tariff adjustment to maintain energy tariffs at cost recovery levels (February 15, 2026), (iii) adopt legislation to make captive power levy ordinance permanent to promote uptake of electricity grid usage and incentivize more efficient use of energy sources (end-May 2025), (iv) adopt legislation to remove the cap on the debt service surcharge to ensure adequate financing is available for CD conversion operation (end-June 2025). On trade, investment policy, and deregulation side (i) prepare a plan based on the assessment conducted to fully phase out all incentives in relation to Special Technology Zones and other industrial parks and zones by 2035 to improve efficiency and provide a level playing field for investment (end-December 2025), and (ii) submit to parliament all required legislation for lifting all quantitative restrictions on the commercial importation of used motor vehicles (initially only for vehicles less than five years old, subject to meeting minimum environmental and safety standards) to liberalize trade and increase vehicle affordability (end-July 2025). The report noted the authorities met all seven quantitative performance criteria (PCs) for end-December 2024: the floors on (i) net international reserves of the SBP; (ii) targeted cash transfer spending; and (iii) the number of new tax returns from new filers; and the ceilings on (iv) net domestic assets of the SBP; (v) the SBP's FX swap/forward book; (vi) the general government primary budget deficit; and (vii) government guarantees. They also met both continuous PCs on (i) zero new flow of SBP credit to the government; and (ii) zero external public payment arrears. The majority of Indicative targets (ITs) were met at end-December, including the ceilings on: (i) the aggregate provincial primary budget deficit; (ii) net accumulation of tax refund arrears; and (iii) power sector payment arrears; and the floors on (iv) revenues collected by provincial revenue authorities; and (v) the weighted average maturity of local currency debt securities. However, the ITs at end-December were missed for the floors on (i) government health and education spending; (ii) net tax revenues collected by the FBR; and (iii) net tax revenues collected from retailers under the Tajir Dost scheme. Nine SBs were met, including on approval of a National Fiscal Pact, improving safeguards for monetary policy operations and approval of amendments to bank resolution and deposit legislation. Three continuous SBs on not granting tax amnesties, seeking ex-ante parliamentary approval for any non-budgeted expenditures, and the maximum average premium between the interbank and open market rates were also met. The SB on provincial AIT legislation was not met at end-October, but this legislation was subsequently passed in February 2025, while another two SBs were missed due to delays in passing amendments to of the Civil Servants and Sovereign Wealth Fund (SWF) Acts, respectively. Finally, two SBs relating to resolving undercapitalized banks and to captive power producers were missed, but subsequent policy actions are expected to accomplish the underlying objectives. Copyright Business Recorder, 2025
