No New Conditions Added to IMF Programme, Finance Ministry Clarifies

**Islamabad (Qudrat Daily):**
The Ministry of Finance has categorically rejected reports suggesting that new conditions have been imposed under the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) programme, stating that the measures outlined in the Memorandum of Economic and Financial Policies (MEFP) are part of an already agreed reform agenda and not sudden or unexpected conditions.

In a statement issued on Sunday, the ministry explained the background, continuity and phased nature of the reform measures agreed under the EFF programme. It clarified that the steps being portrayed as “new conditions” are neither abrupt nor newly introduced, but rather a continuation of the medium-term reform strategy mutually agreed upon by the Government of Pakistan and the IMF. Many of these reforms, the statement added, had already been initiated by the government.

The ministry noted that the IMF’s EFF programme enables member countries to implement structural reforms over the medium term to achieve defined policy objectives. These reforms are not implemented at once but are introduced gradually throughout the programme period. Accordingly, measures under the EFF are divided into logical phases.

It further explained that with each programme review, additional actions are incorporated to progressively achieve the final objectives agreed at the start of the programme. In this context, the MEFP agreed after the second review is a continuation and completion of the MEFP agreed during the first review.

The statement added that during negotiations with the IMF, the Government of Pakistan also presents its own proposed reform policies. When the IMF considers these reforms supportive of achieving the EFF’s objectives, they are incorporated into the MEFP. As a result, several structural measures included in the latest MEFP are reforms that were already underway or had been initiated by the government.

Addressing media reports about alleged “new conditions,” the ministry emphasized that the publication of asset declarations of government employees has been part of the MEFP since the launch of the EFF programme in May 2024. It said the current structural benchmark is a logical next step following amendments to the Civil Servants Act, 1973, which have already been completed. Similarly, strengthening the effectiveness of NAB and coordination with other investigative bodies, particularly provincial anti-corruption establishments, had been agreed upon in earlier reviews.

The ministry stated that preparing action plans for high-risk institutions is also part of the same reform continuity and aligns with pre-agreed measures, alongside the governance and corruption diagnostic report. Providing financial information to provincial institutions for investigating the financial aspects of corruption is part of anti-money laundering and counter-terrorism financing (AML/CFT) reforms that have been included since the start of the EFF programme.

Highlighting the importance of remittances for Pakistan’s external financial stability, the ministry said that after discouraging informal channels, remittances increased by 26 percent in FY2025 compared to FY2024, with a further 9.3 percent growth expected in FY2026. The government, in coordination with the State Bank of Pakistan, is removing obstacles to reduce the cost of remittances, and the IMF has incorporated these measures into the MEFP to further strengthen them.

The ministry also noted that the IMF’s staff report issued in May 2025 recommended a comprehensive study to identify barriers in the local bond market to increase the investor base, which has now been included in the programme as a structural benchmark.

On sugar sector reforms, the ministry clarified that these are government-led initiatives. A task force headed by the Minister for Energy has been constituted by the Prime Minister’s Office to prepare recommendations for full deregulation of the sugar market and a national policy in consultation with the provinces. As these reforms align with the EFF’s objective of reducing government intervention in commodity markets, the IMF has included them in the MEFP.

Regarding revenue reforms, the ministry said a comprehensive reform roadmap for the Federal Board of Revenue (FBR) has been introduced under the Prime Minister’s leadership as part of a broader revenue enhancement agenda. Over the past year, key steps such as approval of a transformation plan, establishment of a Tax Policy Office, and improvements in compliance risk management have been implemented. The current structural benchmark aims to further strengthen these reforms, with the preparation of a medium-term tax reform strategy being a natural continuation of separating tax policy from FBR operations.

The statement added that the privatization of power distribution companies (DISCOs) has been part of the EFF programme since its inception and is being carried out in phases. Finalizing terms for private sector participation in HESCO and SEPCO is the next step following the initial phase. Similarly, public service obligation agreements with seven major state-owned entities are also a continuation of previously agreed measures.

The ministry further said that regulatory reforms and amendments to the Companies Act, 2017, to strengthen compliance requirements for unlisted companies are part of broader efforts to improve the business environment, which have been included since the start of the EFF programme. Amendments related to the Special Economic Zones (SEZ) Act are also the next phase following earlier reviews of SEZs.

On alternative measures in case of revenue shortfalls, the ministry clarified that such provisions have always been a permanent feature of the MEFP. Even the initial MEFP from May 2024 included a structural benchmark to introduce a five percent Federal Excise Duty on fertilizers and pesticides if needed.

Concluding the statement, the Ministry of Finance reiterated that the measures included in the latest MEFP represent the natural and phased continuation of the reform agenda agreed between the Government of Pakistan and the IMF, aimed at ensuring economic stability and sustainable growth. It stressed that portraying these measures as sudden or unexpected new conditions reflects a misunderstanding of the facts.