The International Monetary Fund (IMF) has added 11 fresh conditions to Pakistan’s bailout programme, taking the total tally of demands to 50. The updated list, revealed in the Fund’s Staff Level Report, is linked to the release of the next tranche of financial support.
And there’s a clear warning too — if tensions between India and Pakistan continue to simmer or escalate, it could put the entire programme’s fiscal, external, and reform goals at risk.
One of the headline requirements is that Pakistan’s parliament must approve a ₹17.6 trillion federal budget for the financial year 2026 — and that too in line with the IMF’s staff agreement — by the end of June. This includes ₹1.07 trillion earmarked for development spending.
The report also shows a notable 12% increase in Pakistan’s defence budget for FY27, reaching ₹2.414 trillion. Though defence is often seen as off-limits in fiscal reform conversations, the IMF has clearly taken note of its scale.
Four new conditions have been added to the energy sector reforms. The government must notify a fresh rebasing of electricity tariffs by July 1 to keep prices aligned with actual costs. Gas prices too are under the scanner — a semi-annual tariff adjustment must be notified by February 15, 2026.
One key legislative change demanded is to make the captive power levy ordinance permanent by the end of May. Additionally, the current ₹3.21 per unit cap on the debt service surcharge is to be scrapped — and legislation to that effect must also be passed in parliament.
In a move likely to raise eyebrows and draw mixed reactions, the IMF has instructed Pakistan to lift some curbs on the import of used vehicles. By the end of July, all necessary legislation must be submitted to Parliament to allow the commercial import of used cars that are up to five years old. At present, the ceiling is three years.
A major push is also coming for agriculture tax compliance. All four provinces are required to implement new Agriculture Income Tax laws. That includes setting up an operational platform to process returns, identify and register taxpayers, run awareness campaigns, and improve compliance. Again, the deadline is June.
Looking beyond 2027, Pakistan has been asked to prepare a full governance action plan based on IMF recommendations. It must also lay out a detailed financial sector roadmap post-2027, explaining how it intends to manage regulatory and institutional frameworks into the 2030s.
Another forward-looking condition? All incentives linked to Special Technology Zones and other industrial areas are to be gradually phased out — completely — by 2035.
Despite the exhausting list, there’s no sign that the IMF is letting up. On the contrary, it’s pressing Pakistan to not just implement economic reforms but lock them in through parliamentary approvals and legal amendments.
Meanwhile, the IMF’s warning about rising India-Pakistan tensions adds another layer of uncertainty. If relations worsen, it could derail many of the goals laid out in the bailout programme — from budget targets to structural reforms.
