The finance ministry defended the IMF program’s recent targets as a continuation and refinement of Pakistan’s reform plan, not an imprint of sudden, unprecedented conditions. It described the eleven targets, labeled as “new conditions” in the current IMF arrangement, as part of a phased, medium-term process that builds on reforms already in place, rather than as abrupt impositions.
This clarification follows media reports about the government agreeing to additional targets—such as extra tax measures and spending cuts—starting next month to address revenue gaps and keep the $7 billion Extended Fund Facility (EFF) on track. IMF documents had indicated that committing to these new or revised structural benchmarks, along with completing two prior actions, enabled a staff-level agreement on the second review of the EFF and a subsequent IMF Board approval for about $1.2 billion in disbursement on December 9.
In a press release, the finance ministry emphasized that the measures cited are part of a staged reform agenda negotiated with the IMF, many of which are extensions or logical progressions of reforms already undertaken by the government. The EFF is designed to help countries implement medium-term structural changes aimed at achieving agreed policy goals through a sequenced, step-by-step approach over the program’s duration. Each review builds on earlier actions to reach the program’s initial objectives, with new actions added at successive reviews.
The ministry noted that the finalized MEFP after the second EFF review reflects this phased strategy and may include adjustments to the MEFP agreed during the first review. During negotiations, the government presents its reform plans, and if the IMF views these plans as contributing to the program’s objectives, they are incorporated into the MEFP. Consequently, many structural benchmarks and actions in the latest MEFP originate from reforms already started or completed by Pakistan, rather than being externally imposed new conditions.
Addressing the eleven measures described as “new conditions,” the ministry clarified several points. For asset declarations by civil servants, the reform has been part of the EFF since the initial MEFP in May 2024, with the current benchmark representing a second step following the Civil Servants Act, 1973 amendment.
Strengthening the National Accountability Bureau’s (NAB) independence and operational effectiveness was agreed in earlier reviews, including coordination with provincial anti-corruption bodies. The ongoing development of action plans for high-risk agencies continues this commitment, aligning with the Governance and Corruption Diagnostic Assessment, and runs alongside the ongoing AML/CFT reforms.
Empowering provincial anti-corruption bodies by granting access to financial intelligence fits within the AML/CFT reform agenda that has been integral to the EFF from the start. The ministry added that improving remittance inflows is vital for Pakistan’s external stability: remittances rose 26% year-on-year from FY24 to FY25, with a projected 9.3% increase for FY26, following steps to curb informal channels and enhance cross-border payments in coordination with the State Bank of Pakistan (SBP). IMF’s involvement in these efforts was framed as building on existing reforms through the MEFP.
The IMF staff report from May 2025 recommended a comprehensive study to identify bottlenecks in the local-currency bond market to broaden the investor base, a suggestion that has now been formalized as a structural benchmark. Regarding the sugar industry, the government initiated deregulation through a task force to pursue full liberalization and a national policy in consultation with the provinces; the IMF has included this in the structural benchmarks in line with the EFF’s objective of reducing government intervention in commodity markets.
A roadmap for the Federal Board of Revenue (FBR) is part of a broader domestic resource mobilization reform led by the prime minister, with actions already taken such as the transformation plan, the Tax Policy Office, and strengthened compliance risk management. The new benchmark advances the goal of developing a medium-term tax reform strategy as a logical extension of these prior reforms.
Privatization of distribution companies (Discos) remains a core EFF component and is planned to proceed in phases. Completing preconditions for private-sector participation in Hesco and Sepco follows the first batch of Discos, with Public Service Obligation (PSO) agreements with the largest seven entities reaffirming prior commitments. Regulatory and corporate-compliance reforms include amendments to the Companies Act, 2017 to improve oversight of unlisted firms, aligning with the broader regulatory reform agenda embedded in the EFF from the outset. The SEZ Act also sees a continuing structural benchmark after a prior SEZ assessment study.
The MEFP framework has also long contemplated contingency measures to address potential revenue shortfalls, including the original plan to introduce a 5 percent Federal Excise Duty on fertilisers and pesticides. Overall, the ministry insists that these measures are part of a deliberate, phased reform program designed to stabilize the economy and meet the objectives agreed with the IMF.
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