IMF Imposes Stringent Conditions for Pakistan’s $1.1 Billion Loan Tranche
Government Faces Strict Benchmarks to Secure IMF Loan
ISLAMABAD: Pakistan has been handed 39 strict conditions by the International Monetary Fund (IMF) to secure the second installment of its $1.1 billion loan under the Extended Fund Facility (EFF). These tough measures include asset disclosures by civil servants and their families, the elimination of tax exemptions, and the submission of a governance and corruption assessment report.
The government is required to meet stringent benchmarks such as maintaining foreign exchange reserves equivalent to three months of import bills, achieving fiscal targets, and right-sizing the public finance structure. Key reforms also involve limiting the difference between the open market and interbank exchange rates to 1.25% and ensuring the State Bank of Pakistan’s foreign exchange reserves reach $8.65 billion by the end of the fiscal year.
The Ministry of Finance confirmed that adherence to 22 specific points is essential for qualifying for the loan tranche. Notably, civil servants must disclose their assets by February 2025, and the IMF has insisted on fiscal discipline, including no extra grants outside the budget. The government is also tasked with reducing public sector liabilities, capping government guarantees at Rs5.6 trillion, limiting power sector arrears to Rs417 billion, and controlling tax refund backlogs to Rs24 billion.
During a briefing to the National Assembly’s Standing Committee on Finance, Finance Minister Muhammad Aurangzeb acknowledged the macroeconomic stability achieved over the past 14 months but stressed the need for reforms in taxation, energy sectors, and population control. He also emphasized that this IMF loan agreement is Pakistan’s final message to the international community, with urgent actions needed on inflation and broader economic issues.
Read More: FBR Misses November Tax Collection Target, Faces Pressure from IMF
Furthermore, the government is finalizing a 10-year partnership framework with the World Bank to enhance economic stability, while the stock market has shown positive trends as a result of economic improvements.
