THE clarification issued by the Ministry of Finance on Sunday that no new conditions were imposed under the International Monetary Fund’s Extended Fund Facility (EFF) loan programme and that the lender’s structural benchmarks aligned with the government’s own reform agenda seems to be plausible despite the fact that some of the important points agreed with the IMF have been left unexplained.
This is evident from the point by point explanation of the conditions as well as the modus operandi for implementation of the agreed framework.
There is no doubt that the point relating to declaration of assets by civil servants is not new as they have been declaring assets for decades and there has been consistent demand that these should be accessible to general public to ensure their proper scrutiny and transparency. Similarly, the commitment to enhance the National Accountability Bureau’s (NAB) effectiveness and independence, including coordination with provincial anti-corruption establishments not only stems from previous reviews but is also in line with the aspirations of the people as the Bureau so far has not been able to stem the rot. There have also been legitimate concerns that the institution was widely used to victimize political opponents, distracting it from its original mandate and denting its reputation and credibility. There can be no two opinions that strengthening remittance inflows is critical to Pakistan’s external stability and the government, in close coordination with the State Bank of Pakistan (SBP) has been implementing several initiatives to curb informal channels. It is mainly because of this strategy that the remittances have increased significantly during the last few years and there is every logic to not only continue with the existing policies but also take more measures to maintain this growth. The Ministry has pointed out that the IMF staff report published in May 2025 recommended a comprehensive study to identify bottlenecks in the local currency bond market to broaden the investor base. This recommendation has now been formalized as a structural benchmark. The FBR reforms are also an ongoing exercise and are dictated by the ground realities in view of low tax-to-GDP ratio and the need to minimize reliance on external resources. The development of a comprehensive roadmap for the Federal Board of Revenue (FBR) is, therefore, part of a broader domestic resource mobilization reform agenda led directly by the Prime Minister himself. Key actions already taken include approval of the Transformation Plan, establishment of Tax Policy Office, and strengthening of Compliance Risk Management. The requirement to develop and publish a medium-term tax reform strategy is a logical extension of earlier reforms, particularly the establishment and operationalization of the Tax Policy Office to separate tax policy formulation from FBR’s operational functions. There is surely a need to evolve a tax reform strategy but people of Pakistan expect that its focus should be on untapped sectors and sources and not burdening the already taxed segments of the society. It should also be a matter of concern for planners that nil-filers constitute almost forty percent of the total returns filed this year. The strategy should include ways and means to ensure that due taxes are realized from those who otherwise enjoy luxurious lifestyles. The Finance Ministry might be correct in asserting that contingency measures to address potential revenue shortfalls have consistently been part of the MEFP framework since May 2024 but these should be rational. It is also true that the sugar industry deregulation initiative originates from the government but it is fundamentally flawed and amounts to surrendering before the powerful and manipulative sugar mafia. Discos’ privatization can also be described as a home-grown plan necessitated by a crisis-ridden power sector but regrettably the axe falls on efficient discos and not those which are a sheer burden on the national exchequer. Again, possibilities of further depreciation of the rupee, hike in petroleum levy and increase in power tariff are suicidal.
