New Delhi, May 18: The International Monetary Fund (IMF) has kept 11-point checklists on Pakistan for the release of the next tranche of its bailout programme.
The IMF warned Pakistan that tensions with India could heighten risks to the scheme's fiscal, external, and reform goals, according to a media report.
The new conditions imposed on Pakistan include the parliamentary approval of a new Rs 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.
According to reports, the IMF said 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 Rs 2.414 trillion, which is higher by Rs 252 billion or 12%.
Compared to the IMF's projection, the government has indicated allocating over Rs 2.5 trillion or an 18% higher budget, after confrontation with India early this month.
With the fress 11-points slapped on Pakistan by the IMF, the checklist reaches at 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 Rs 17.6 trillion, including Rs 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 scheduled latest by June 2025, said the report.
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 fourth 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 kept before Pakistan. Acccording to it, the government will issue notifications of the annual electricity tariff rebasing by July 1st 2025 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 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 June 2025, 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.
Apart from it, 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 2025 that allows import of cars up to three years old.
