Islamabad — The International Monetary Fund (IMF) has introduced 11 fresh conditions for Pakistan under the ongoing $7 billion Extended Fund Facility (EFF), signaling a tougher stance on reforms and governance as the country navigates through a challenging economic landscape.
The IMF conditions for Pakistan 2025 come at a time when the country is navigating serious economic challenges. These conditions are tied to the continuation of the loan program and could have far-reaching effects on the lives of everyday Pakistanis.
The new conditions are in addition to the 39 already agreed upon benchmarks, bringing the total to 50. These requirements must be fulfilled to keep the IMF program on track and ensure future disbursements of the much-needed funds.
According to official sources, the latest set of demands focuses on critical areas such as tax reforms, governance improvement, energy sector restructuring, and macroeconomic stability. The conditions were outlined in the IMF’s first review report of the bailout program.
Below is a breakdown of the key conditions and what they mean for Pakistan’s economy, people, and government.
1. Parliamentary Approval of FY2026 Budget
Pakistan must secure parliamentary approval of a federal budget worth Rs 17.6 trillion for the fiscal year 2026. The budget should be in line with IMF’s fiscal targets, focusing on revenue generation, reduced borrowing, and better resource allocation.
What this means: Pakistan must balance between austerity and public welfare while ensuring that parliament backs the financial roadmap required by the IMF.
2. Agricultural Income Tax Enforcement
For the first time, provinces are being pushed to implement agricultural income tax laws in their true spirit. This includes establishing registration systems and enforcing compliance by June 2025.
Why it matters: Agriculture has long been a largely untaxed sector in Pakistan. Bringing it into the tax net could significantly increase revenues but may face political resistance from influential landowners.
3. Publication of Governance Action Plan
Pakistan is required to release a detailed governance reform plan based on recommendations from the IMF’s Governance Diagnostic Assessment. This plan must tackle issues like corruption, mismanagement, and bureaucratic inefficiencies.
Impact: Enhancing transparency and accountability could improve investor confidence and public trust but will require strong political will.
4. Long-Term Financial Sector Strategy
The government must draft and publish a long-term financial sector strategy covering post-2027 institutional and regulatory frameworks. This roadmap is expected to be ready by June 2026.
Purpose: A clear financial strategy is key to stabilizing banks, improving financial inclusion, and building investor confidence.
5. Electricity Tariff Rebasings
New electricity tariffs must be notified by July 1, 2025. These tariffs should reflect cost recovery levels, meaning consumers will likely bear the brunt of higher prices unless subsidies are restructured.
Public reaction: Expected to be unpopular, especially with inflation already squeezing household budgets.
6. Gas Tariff Adjustments
The government is required to make semi-annual gas tariff adjustments, with the next notification due by February 15, 2026. The goal is again to ensure that tariffs match costs, reducing circular debt.
Long-term benefit: Reduces losses and ensures energy sector sustainability, but it may lead to higher gas bills.
7. Permanent Captive Power Levy Legislation
The IMF has asked Pakistan to pass legislation making the captive power levy (previously imposed through an ordinance) permanent by the end of May 2025.
What it changes: This condition aims to ensure consistent revenue from private power generation units.
8. Removal of Import Restrictions on Used Cars
Pakistan must lift the restriction on importing used cars older than three years. This is part of broader trade liberalization efforts encouraged by the IMF.
Economic impact: May benefit consumers and car dealers, but could hurt local auto manufacturers and worsen the trade deficit if not balanced carefully.
9. Phasing Out Special Technology Zone Incentives
The government has been asked to gradually phase out tax breaks and incentives for Special Technology Zones (STZs).
Concerns: While this may streamline expenditures, it could slow down growth in the tech industry unless alternative support mechanisms are offered.
10. Reforms in the Energy Sector
The IMF is pushing for wide-ranging energy reforms to reduce circular debt, improve governance, and increase efficiency. This includes better metering, theft control, and subsidy targeting.
Why it’s essential: Pakistan’s energy crisis is deeply rooted in poor management. Reforms could stabilize the sector but require major policy shifts.
11. Regional Stability Assurance
Perhaps the most politically sensitive condition: the IMF has warned Pakistan that escalating tensions with neighboring India could derail economic reforms. While the IMF doesn’t usually comment on foreign policy, this inclusion reflects growing concern over geopolitical stability.
Diplomatic note: Maintaining peace in the region is now directly tied to Pakistan’s economic performance.
Among the IMF conditions for Pakistan 2025, the most pressing involve increased taxation, subsidy removal, and reforms in energy and public sectors.
What’s at Stake for Pakistan?
The IMF’s stricter approach is a clear message that Pakistan must take structural reforms seriously. With foreign reserves under pressure and inflation still high, failure to comply could stall funding and create further economic hardship.
Experts warn that while some of these reforms are necessary and long overdue, their implementation could be painful in the short term — especially for the middle and lower-income classes.
Impact on Everyday Life: What It Means for the Common Pakistani
Though the IMF’s conditions primarily target economic policy, the real burden will fall on ordinary citizens. With electricity and gas tariffs expected to rise, monthly utility bills will increase, placing more strain on already stretched household budgets. Fuel price hikes—driven by subsidy cuts—could make transportation and food more expensive, further feeding inflation.
The removal of tax exemptions and restructuring of state-owned enterprises may bring job uncertainty, especially for salaried government employees and youth entering the job market. For retirees, pension reforms could reduce post-retirement security.
In parallel, the devaluation of the rupee is likely to make imported essentials like medicines and electronics even costlier, hurting both consumers and small businesses.
However, not all is grim. The IMF has emphasized improving social safety nets like BISP and Ehsaas. If implemented well, these programs could offer targeted relief to the most vulnerable segments of society—though their success will depend on execution and transparency.
Public and Political Reactions
Many analysts view these conditions as a double-edged sword. While they promote transparency and sustainability, they also increase the financial burden on ordinary citizens.
Several political parties have already expressed concern about increased utility tariffs and new tax laws, especially with general elections on the horizon.
However, economic observers argue that avoiding these reforms would lead to greater long-term instability and even more dependence on foreign aid.
While the IMF conditions for Pakistan 2025 may stabilize the economy on paper, the government must ensure that the burden does not fall disproportionately on the people.
