ISLAMABAD – The International Monetary Fund (IMF) has added almost a dozen fresh conditions to Pakistan’s $7 billion bailout programme, further expanding policy requirements across taxation, governance, energy pricing, investment frameworks and industrial regulations.
The reports suggested that one of the key conditions requires the National Assembly to approve the upcoming federal budget for fiscal year 2026-27 strictly in line with the IMF staff-level agreement.
This is the second consecutive year that Pakistan’s budget will be formulated under IMF-guided parameters.
Officials said the recent staff-level agreement was finalised after the inclusion of 11 additional conditions, taking the total number of IMF requirements imposed over the past two years to 75. These cover broad areas of economic management, governance reforms and private sector development.
Pakistan has also assured the IMF that the upcoming budget will remain fiscally consolidated, with no focus on higher growth targets. Finance Minister Muhammad Aurangzeb conveyed this commitment during his meeting with the IMF deputy managing director in Washington last week.
Under the new commitments, Pakistan will amend laws governing Special Economic Zones (SEZs) and the Special Technology Zones Authority (STZA) by June 2027. The reforms aim to gradually phase out existing tax incentives and shift toward cost-based incentives.
The changes will also remove the authority of relevant boards and institutions, including the Board of Investment and SEZ authorities, to grant tax exemptions. The IMF has set a broader objective of fully phasing out fiscal incentives for special technology zones by 2035.
Export processing zones will also be prohibited from selling goods in the local market from September this year, a step aimed at reducing tax evasion concerns.
Authorities have further agreed to allocate 6,000 acres of land in Karachi on lease for SEZ development without upfront charges, with individual developers eligible for up to 1,000 acres. Legal amendments will also limit court intervention in commercial disputes related to these zones.
Pakistan has committed to establishing a Pakistan Regulatory Registry by June next year to consolidate and digitise business regulations at the federal level, with plans to extend it later to provincial laws.
The IMF is also pushing for easing foreign exchange restrictions, prompting the central bank to prepare a roadmap for their gradual removal.
New conditions require strict implementation of quarterly tariff adjustments (QTAs) and monthly fuel cost adjustments (FCAs) in electricity pricing. The government has also committed to annual electricity tariff revisions in January 2027 to reflect global energy price changes.
Semi-annual gas tariff adjustments will also be introduced in line with cost recovery requirements determined by the Oil and Gas Regulatory Authority (OGRA), starting July 2026 and February 2027.
The Federal Board of Revenue (FBR) will centralise audit case selection and implement a standardised audit manual along with a comprehensive risk and integrity register. High-risk tax cases identified through the system will require mandatory follow-up.
The Public Procurement Regulatory Authority (PPRA) rules will be amended by September to remove preferential treatment for state-owned enterprises in public contracts, subject to federal cabinet approval.
To offset the impact of rising energy prices and inflation, Pakistan has agreed to increase Benazir Income Support Programme (BISP) cash transfers from Rs14,500 to Rs19,500 starting January 2027. The revision aims to better align support with inflation trends and improve assistance for low-income households.
Out of the $7 billion package, the IMF has so far released $3 billion. The next tranche of $1 billion is expected in the first week of May, subject to Pakistan’s continued compliance with programme conditions.
