Latest news with #GovernanceDiagnosticAssessment
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)
The Hindu
18-05-2025
- Business
- The Hindu
IMF imposes 11 new conditions on Pakistan, warns it against risks to bailout programme: Report
The International Monetary Fund (IMF) has slapped 11 new conditions on Pakistan for the release of the next tranche of its bailout programme and warned that tensions with India could heighten risks to the scheme's fiscal, external, and reform goals, according to a media report on Sunday (May 18, 2025). The new conditions imposed on Pakistan include the parliamentary approval of a new ₹17.6 trillion budget, an increase in the debt servicing surcharge on electricity bills and lifting restrictions on import of more than three-year-old used cars. The Express Tribune newspaper said the Staff Level report, which the IMF released on Saturday (May 18, 2025), also said that "rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten risks to the fiscal, external and reform goals of the programme". The report further stated that tensions between Pakistan and India have risen significantly over the past two weeks, but so far, the market reaction has been modest, with the stock market retaining most of its recent gains and spreads widening moderately. The IMF report has shown the defence budget for the next fiscal year at ₹2.414 trillion, which is higher by ₹252 billion or 12%. Compared to the IMF's projection, the government has indicated allocating over ₹2.5 trillion or an 18% higher budget, after confrontation with India early this month. India carried out precision strikes under 'Operation Sindoor' on terror infrastructure early on May 7 in response to the April 22 Pahalgam terror attack that killed 26 people. India and Pakistan reached an understanding on May 10 to end the conflict after four days of intense cross-border drone and missile strikes. The Express Tribune report said that the IMF slapped 11 more conditions on Pakistan, taking the total conditions to 50. It has imposed the new condition of securing "parliamentary approval of the fiscal year 2026 budget in line with the IMF staff agreement to meet programme targets by end-June 2025". The IMF report has shown the total size of the federal budget at ₹17.6 trillion, including ₹1.07 trillion for development spending. A new condition has also been imposed on the provinces where the four federating units will 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. The deadline for the provinces is June this year. According to the third new condition, the government will publish a governance action plan based on the recommendations of the Governance Diagnostic Assessment by the IMF. The purpose of the report is to publicly identify reform measures to address critical governance vulnerabilities. Another new condition states that the government will prepare and publish a plan outlining the government's post-2027 financial sector strategy, outlining the institutional and regulatory environment from 2028 onwards. In the energy sector, four new conditions have been introduced. The government will issue notifications of the annual electricity tariff rebasing by July 1st of this year to maintain energy tariffs at cost recovery levels. It will also issue a notification of the semi-annual gas tariff adjustment to maintain energy tariffs at cost recovery levels by February 15, 2026, according to the report. Parliament will also adopt legislation to make the captive power levy ordinance permanent by the end of this month, according to the IMF. The government has increased the cost for the industries to force them to shift to the national electricity grid. Parliament will also adopt legislation to remove the maximum ₹3.21 per unit cap on the debt service surcharge, which is tantamount to punishing honest electricity consumers to pay for the inefficiency of the power sector. The IMF and the World Bank dictated that wrong energy policies are causing the accumulation of the circular debt in addition to the government's bad governance. The deadline to remove the cap is the end of June, according to the report. The IMF has also imposed a condition that Pakistan will 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. The report has to be prepared by the end of this year. Finally, in a consumer-friendly condition, the IMF has asked Pakistan to submit to the 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 by the end of July. Currently, only cars up to three years old can be imported.
Scroll.in
18-05-2025
- Business
- Scroll.in
IMF imposes 11 new bailout conditions on Pakistan
The International Monetary Fund has imposed 11 new conditions on Pakistan for the release of the next fund tranche as part of its bailout programme, The Express Tribune reported on Sunday. This increased the number of conditions to 50. In a staff-level report released on Saturday, the United Nations financial agency warned that 'rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten risks to the fiscal, external and reform goals of the programme'. On May 9, the United Nations financial agency approved a fresh $1 billion financial assistance programme for Islamabad as part of its bailout package. The conditions imposed by the IMF on Saturday included Islamabad having to secure parliamentary approval for a new $62.2 billion budget, implementing an increase in the debt servicing surcharge on electricity bills and lifting restrictions on the import of used cars that are older than three years, The Express Tribune reported. The IMF imposed the new conditions in relation to lending worth $7 billion, the report added. The condition of securing parliamentary approval of the 2025-'26 Budget 'was in line with the IMF staff agreement to meet programme targets by the end of June', the newspaper reported. Another condition was that the Pakistani government must publish a governance action plan based on the recommendations of the IMF's Governance Diagnostic Assessment, according to The Express Tribune. The IMF report projected the country's defence budget for the next fiscal year to be $8.5 billion, the newspaper reported. Islamabad, however, has indicated 18% higher allocation for defence after military tensions with New Delhi escalated earlier this month, The Express Tribune reported. The tensions escalated on May 7 when the Indian military carried out strikes – codenamed Operation Sindoor – on what it claimed were terrorist camps in Pakistan and Pakistan-occupied Kashmir. The strikes were in response to the terror attack in Jammu and Kashmir's Pahalgam. The Pakistan Army retaliated to Indian strikes by repeatedly shelling Indian villages along the Line of Control in Jammu and Kashmir. At least 22 Indian civilians and seven defence personnel were killed. On May 10, India and Pakistan reached an 'understanding' to halt firing following a four-day conflict. Noting that the tensions between the two neighbouring countries had risen over the past two weeks, the IMF said that the market reaction, however, had been modest, with the Pakistani stock market retaining most of its recent gains, The Express Tribune reported. On May 9, India raised concerns about the efficacy of IMF's programmes for Pakistan 'given its poor track record, and also on the possibility of misuse of debt financing funds for state-sponsored cross-border terrorism'. no less than terror funding ' and should be reconsidered.
Hindustan Times
18-05-2025
- Business
- Hindustan Times
IMF slaps 11 new conditions on Pak over bailout programme: Report
The International Monetary Fund (IMF) has slapped 11 new conditions on Pakistan for the release of the next tranche of its bailout programme and warned that tensions with India could heighten risks to the scheme's fiscal, external, and reform goals, according to a media report on Sunday. The new conditions imposed on Pakistan include the parliamentary approval of a new ₹17.6 trillion budget, an increase in the debt servicing surcharge on electricity bills and lifting restrictions on import of more than three-year-old used cars. The Express Tribune newspaper said the Staff Level report, which the IMF released on Saturday, also said that "rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten risks to the fiscal, external and reform goals of the programme". The report further stated that tensions between Pakistan and India have risen significantly over the past two weeks, but so far, the market reaction has been modest, with the stock market retaining most of its recent gains and spreads widening moderately. The IMF report has shown the defence budget for the next fiscal year at ₹2.414 trillion, which is higher by ₹252 billion or 12%. Compared to the IMF's projection, the government has indicated allocating over ₹2.5 trillion or an 18% higher budget, after confrontation with India early this month. India carried out precision strikes under 'Operation Sindoor' on terror infrastructure early on May 7 in response to the April 22 Pahalgam terror attack that killed 26 people. Following the Indian action, Pakistan attempted to attack Indian military bases on May 8, 9 and 10. India and Pakistan reached an understanding on May 10 to end the conflict after four days of intense cross-border drone and missile strikes. The Express Tribune report said that the IMF slapped 11 more conditions on Pakistan, taking the total conditions to 50. It has imposed the new condition of securing "parliamentary approval of the fiscal year 2026 budget in line with the IMF staff agreement to meet programme targets by end-June 2025". The IMF report has shown the total size of the federal budget at ₹17.6 trillion, including ₹1.07 trillion for development spending. A new condition has also been imposed on the provinces where the four federating units will 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. The deadline for the provinces is June this year. According to the third new condition, the government will publish a governance action plan based on the recommendations of the Governance Diagnostic Assessment by the IMF. The purpose of the report is to publicly identify reform measures to address critical governance vulnerabilities. Another new condition states that the government will prepare and publish a plan outlining the government's post-2027 financial sector strategy, outlining the institutional and regulatory environment from 2028 onwards. In the energy sector, four new conditions have been introduced. The government will issue notifications of the annual electricity tariff rebasing by July 1st of this year to maintain energy tariffs at cost recovery levels. It will also issue a notification of the semi-annual gas tariff adjustment to maintain energy tariffs at cost recovery levels by February 15, 2026, according to the report. Parliament will also adopt legislation to make the captive power levy ordinance permanent by the end of this month, according to the IMF. The government has increased the cost for the industries to force them to shift to the national electricity grid. Parliament will also adopt legislation to remove the maximum Rs3.21 per unit cap on the debt service surcharge, which is tantamount to punishing honest electricity consumers to pay for the inefficiency of the power sector. The IMF and the World Bank dictated that wrong energy policies are causing the accumulation of the circular debt in addition to the government's bad governance. The deadline to remove the cap is the end of June, according to the report. The IMF has also imposed a condition that Pakistan will 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. The report has to be prepared by the end of this year. Finally, in a consumer-friendly condition, the IMF has asked Pakistan to submit to the 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 by the end of July. Currently, only cars up to three years old can be imported.
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Business Standard
18-05-2025
- Business
- Business Standard
Tensions with India may derail bailout scheme's goals: IMF warns Pakistan
The International Monetary Fund (IMF) has warned Pakistan ahead of the release of the next tranche of its bailout programme, saying that tensions with India could "heighten risks to the scheme's fiscal, external, and reform goals". In its first review of the over $1 billion bailout programme, the IMF noted the tensions between India and Pakistan following the April 22 Pahalgam terror attack, in which 26 people were killed. The report said that so far, the market reaction in Pakistan had been modest, with the stock market retaining most of its recent gains and spreads widening moderately. "The rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten enterprise risks to the fiscal, external and reform goals of the program. Reputational risks could also come from any perceived lack of evenhanded or if there was a perceived misuse of fund disbursements," the report said. The IMF report places Pakistan's defence allocation for the upcoming fiscal year at PKR 2.414 trillion, reflecting a 12 per cent increase or PKR 252 billion more than the previous year. In contrast, the government has signalled plans to allocate over PKR 2.5 trillion, marking an 18 per cent rise, following the recent escalation with India earlier this month. IMF imposes fresh conditions on Pakistan The IMF also slapped 11 new conditions on Pakistan for the release of the next tranche of its bailout programme. This takes the total conditions imposed on Pakistan to 50. A key condition requires the parliamentary approval of the FY26 budget—projected at PKR 17.6 trillion, including PKR 1.07 trillion for development spending—by the end of June 2025, in line with IMF programme targets. On the provincial side, the four federating units must implement new agricultural income tax laws, supported by digital platforms for taxpayer registration, return processing, and compliance measures, with a deadline of June 2025. The IMF also expects Islamabad to publish a Governance Action Plan, based on findings from the Fund's Governance Diagnostic Assessment, to address persistent governance weaknesses. Pakistan must also unveil a post-2027 financial sector strategy, outlining long-term institutional and regulatory reforms from 2028 onwards. In the energy sector, four conditions have been introduced to ensure cost recovery and reduce circular debt: the rebasing of electricity tariffs by July 1, 2025, a semi-annual gas tariff adjustment by February 15, 2026, legislation to make the captive power levy permanent, and the removal of the PKR 3.21/unit cap on the debt servicing surcharge—currently hindering full cost recovery. The IMF has mandated Pakistan to draft a plan for phasing out incentives related to Special Technology Zones and other industrial parks by 2035, with the reform roadmap due by the end of this year. The Fund also wants the government to introduce legislation in Parliament by July 2025 to lift quantitative restrictions on importing used vehicles, initially for cars less than five years old—expanding the current limit set at three years. IMF loan to Pakistan On May 9, the IMF approved the immediate disbursement of about $1 billion to Pakistan under the ongoing Extended Fund Facility. The global lender said that Pakistan's 37-month EFF was approved on September 25, 2024, and "aims to build resilience and enable sustainable growth", with priorities including entrenching macroeconomic sustainability. India opposed the IMF's extension of fresh loans to Pakistan, saying they could be misused for financing state-sponsored cross-border terrorism. New Delhi also abstained from voting at the crucial IMF meeting.
