The International Monetary Fund (IMF) has slapped 11 new terms on Pakistan for the release of the next installment of its bailout program and warned that tension with India can increase the risk for fiscal, external and improvement goals of the scheme, according to a media report on Sunday, May 18, 2025. Photo Credit: Reuters
The International Monetary Fund (IMF) has slapped 11 new conditions on Pakistan for the release of the next installment of its bailout program and warned that tension with India, Sunday (May 18, 2025), according to a media report on Sunday (May 18, 2025), may increase the risk for the fiscal, external and improvement goals of the plan.
The new terms imposed on Pakistan include parliamentary approval of a new of 17.6 trillion budget, increase in debt servicing surcharge on electricity bills and restrictions on imports on import of cars used for three years old.
Express tribune The newspaper stated that the staff level report, which was released by the IMF on Saturday (May 18, 2025), also said that “the increasing tension between India and Pakistan, if continuously or deteriorated, may increase the risk for the fiscal, external and improvement goals of the program”.
The report further states that the tension between Pakistan and India has increased considerably in the last two weeks, but so far, the market reaction has been modest, the stock market has maintained most of its recent benefits and spreads moderately widening.
The IMF report has shown the defense budget for the next financial year at ₹ 2.414 trillion, which is ₹ 252 billion or more than 12%.
Compared to the projection of the IMF, the government has indicated to allocate 2.5 trillion or 18% more budget after a confrontation with India earlier this month.
India carried out accurate attacks under the ‘Operation Sindoor’ on the terrorist infrastructure in early 7 May in response to the Pahgam terror attack on 22 April, killing 26 people.
India and Pakistan came to an understanding on May 10 on 10 May to end the conflict after a cross -border drone and missile strikes.
Express tribune The report said that the IMF slapped 11 more conditions on Pakistan, making the total conditions to 50.
It has implemented the new status to achieve the Parliamentary Approval of the budget of the financial year 2026 as per the IMF Staff Agreement to meet the goals of the program by “End-June 2025.
The IMF report has shown the total size of the federal budget on 17.6 trillions, including ₹ 1.07 trillion for growth expenses.
A new status has also been implemented on the provinces, where four federabling units will implement new agricultural income tax laws through a comprehensive plan, including the installation of an operational platform for returns, taxpayer identity and registration, a communication campaign and processing of a compliance improvement scheme.
The time limit of provinces is June this year.
According to the third new situation, the government will publish a governance action plan based on the recommendations of the Government IMF on the recommendations of clinical evaluation.
The objective of the report is to identify publicly improvement measures to overcome the weaknesses of important governance.
Another new situation states that the government will prepare and publish a plan to outline the 2010 financial sector strategy, underlining the institutional and regulatory environment from 2028.
In the energy sector, four new conditions have been introduced. The government will release information about annual power tariff ribbassing by 1 July of this year to maintain energy tariffs at the level of cost recovery.
According to the report, it will also release information about semi-annual gas tariff adjustment to maintain energy tariffs at the cost recovery level by February 15, 2026.
According to the IMF, Parliament will also adopt a law to make the captive power levy ordinance permanent by the end of this month. The government has increased the cost to force industries to move to the national power grid.
The Parliament will adopt a law to remove a maximum of ₹ 3.21 per unit cap on loan service surcharge, which is the same for punishing honest electricity consumers to pay for the power sector disability.
The IMF and the World Bank decided that wrong energy policies are causing the accumulation of circular debt besides the government’s bad governance. According to the report, the deadline of the cap removal is the end of June.
The IMF has also implemented a condition that Pakistan will formulate a plan based on the evaluation made to fully phase out all the incentives in relation to special technology sectors and other industrial parks and areas by 2035. The report is to be prepared by the end of this year.
Finally, in a consumer-friendly situation, the IMF has asked Pakistan to present to Parliament that all necessary laws to lift all quantitative sanctions on commercial imports of all motor vehicles (initially for vehicles below five years only by the end of July. Currently, cars up to three years can be imported.
Published – May 18, 2025 07:04 pm IST
