To save Pakistan’s deteriorating economy, the International Monetary Fund (IMF) has put immense pressure on the country and added 11 new conditions under its $7 billion bailout program. With this, Pakistan will have to comply with a total of 64 conditions in the next 18 months. IMF has taken this step when it had approved to release installment of $ 1.2 billion to Pakistan.
Pakistan’s economy is highly dependent on foreign financing, especially from the IMF and the World Bank. Pakistan almost avoided debt default after IMF provided $7 billion bailout in 2024. Since last year, Pakistan has become the largest borrower of IMF and till now it has received about 3.3 billion dollars. Although the IMF has made it clear that there is no free lunch, the country will have to follow strict conditions for this bailout.
The IMF has told Pakistan that the assets of all senior federal government officials will have to be disclosed by the end of this year. Later this rule will also apply to provincial officials. The IMF has called for the development of action plans to combat corruption in 10 high-risk departments and for provincial anti-corruption units to be given access to financial information.
Additionally, Pakistan will have to comprehensively assess remittance costs and cross-border payment barriers and formulate a strategy for local currency bond market reforms. The IMF has called for a liberalization policy in the national sugar market to curb cartels long controlled by politically connected business groups.
Pakistan must submit a Board of Revenue reform roadmap and medium-term tax reform strategy. There is new monitoring on the power sector also. IMF has asked to reduce losses in the power sector and fulfill the pre-conditions for participation in private sector distribution companies. The corporate reforms include amendments to the Companies Act and changes to the Special Economic Zones (SEZ) Act. Moreover, if the revenue collection next year remains below the target, Pakistan will have to present a mini budget.
These IMF conditions are an attempt to bring about comprehensive reforms in Pakistan’s economy and correct administrative inefficiencies, corruption and financial shortcomings. However, the price of this bailout is proving to be very high for Pakistan, and the next 18 months are going to be challenging for the country.
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