No New IMF Conditions, Reforms Align Government Agenda

ISLAMABAD: The Ministry of Finance on Sunday clarified that no new conditions have been imposed under the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) program, emphasizing that the structural benchmarks outlined by the IMF align with Pakistan’s ongoing reform agenda.

In a statement, the ministry explained that the measures in the latest Memorandum of Economic and Financial Policies (MEFP) reflect the continuity, sequencing, and deepening of reforms already agreed upon, rather than introducing abrupt or unprecedented requirements. Many of these steps are phased extensions or logical progressions of initiatives already undertaken by the government.

The ministry highlighted that the EFF program is designed to support countries in implementing medium-term structural reforms, which are executed in a sequenced, step-by-step manner over the program’s duration. Each review builds upon previous actions to ensure agreed policy goals are met. The latest MEFP, finalized after the Second Review of the EFF, supplements the earlier MEFP and follows this phased approach.

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The statement also detailed the consultation process between Pakistan and the IMF, explaining that reforms proposed by Islamabad are incorporated into the MEFP only when they contribute to agreed program objectives. Consequently, most structural benchmarks in the latest MEFP derive from reforms already initiated rather than being externally imposed.

Key areas highlighted by the finance ministry include:

• Civil Servants’ Asset Declarations: Already part of the EFF since May 2024; the current benchmark represents the next step following legislative amendments to the Civil Servants Act, 1973.

• Enhancing NAB Effectiveness: Efforts to improve the National Accountability Bureau’s independence and coordination with provincial anti-corruption agencies are continuations of earlier commitments.

• Facilitating Remittances: Measures to strengthen remittance inflows have resulted in a 26% increase year-on-year from FY24 to FY25, with further growth projected. Structural benchmarks support efforts to remove bottlenecks in cross-border payments.

• Local Currency Bond Market Development: Following an IMF recommendation, a study to identify obstacles and broaden the investor base has been formalized as a benchmark.

• Sugar Industry Deregulation: Government-led initiatives to liberalize the sugar market and formulate a national policy have been included as structural benchmarks due to their alignment with EFF objectives.

• FBR Reforms & Medium-Term Tax Strategy: Efforts to enhance domestic resource mobilization, including the FBR Transformation Plan, Tax Policy Office establishment, and compliance risk management, continue under the program.

• Privatisation of Discos: The phased privatization of distribution companies remains a core EFF component, with ongoing steps including private-sector participation in Hesco and SEPCO and signing of Public Service Obligation (PSO) agreements.

• Regulatory Reforms & Corporate Compliance: Amendments to the Companies Act, 2017, and SEZ Act-related benchmarks aim to strengthen corporate compliance and improve the business climate, continuing previous reform initiatives.

• Revenue Shortfall Contingencies: Measures to address potential revenue shortfalls, including a 5% Federal Excise Duty on fertilizer and pesticides, have been part of the EFF framework since May 2024.

The ministry stressed that all measures under the EFF are phased, logical, and part of a medium-term agenda, designed to deepen and extend ongoing reforms rather than imposing new or external conditions.