International Monetary Fund imposes 11 new conditions on Pakistan

The International Monetary Fund IMF has slapped 11 new conditions on Pakistan for the release of the next tranche of its bailout programme and warned that tensions with India could heighten risks to the schemes fiscal external and reform goals according to a media report on SundayThe new conditions imposed on Pakistan include the parliamentary approval of a new Rs 176 trillion budget an increase in the debt servicing surcharge on electricity bills and lifting restrictions on import of more than threeyearold used carsThe Express Tribune newspaper said the Staff Level report which the IMF released on Saturday also said that rising tensions between India and Pakistan if sustained or deteriorate further could heighten risks to the fiscal external and reform goals of the programmeThe report further stated that tensions between Pakistan and India have risen significantly over the past two weeks but so far the market reaction has been modest with the stock market retaining most of its recent gains and spreads widening moderatelyThe IMF report has shown the defence budget for the next fiscal year at Rs 2414 trillion which is higher by Rs 252 billion or 12 percent Compared to the IMFs projection the government has indicated allocating over Rs 25 trillion or an 18 percent higher budget after confrontation with India early this monthIndia carried out precision strikes under Operation Sindoor on terror infrastructure early on May 7 in response to the April 22 Pahalgam terror attack that killed 26 people Following the Indian action Pakistan attempted to attack Indian military bases on May 8 9 and 10India and Pakistan reached an understanding on May 10 to end the conflict after four days of intense crossborder drone and missile strikesThe Express Tribune report said that the IMF slapped 11 more conditions on Pakistan taking the total conditions to 50 It has imposed the new condition of securing parliamentary approval of the fiscal year 2026 budget in line with the IMF staff agreement to meet programme targets by endJune 2025The IMF report has shown the total size of the federal budget at Rs 176 trillion including Rs 107 trillion for development spendingA new condition has also been imposed on the provinces where the four federating units will implement the new Agriculture Income Tax laws through a comprehensive plan including the establishment of an operational platform for processing returns taxpayer identification and registration a communication campaign and a compliance improvement plan The deadline for the provinces is June this yearAccording to the third new condition the government will publish a governance action plan based on the recommendations of the Governance Diagnostic Assessment by the IMFThe purpose of the report is to publicly identify reform measures to address critical governance vulnerabilitiesAnother new condition states that the government will prepare and publish a plan outlining the governments post2027 financial sector strategy outlining the institutional and regulatory environment from 2028 onwardsIn the energy sector four new conditions have been introduced The government will issue notifications of the annual electricity tariff rebasing by July 1st of this year to maintain energy tariffs at cost recovery levelsIt will also issue a notification of the semiannual gas tariff adjustment to maintain energy tariffs at cost recovery levels by February 15 2026 according to the report Parliament will also adopt legislation to make the captive power levy ordinance permanent by the end of this month according to the IMF The government has increased the cost for the industries to force them to shift to the national electricity gridParliament will also adopt legislation to remove the maximum Rs 321 per unit cap on the debt service surcharge which is tantamount to punishing honest electricity consumers to pay for the inefficiency of the power sectorThe IMF and the World Bank dictated that wrong energy policies are causing the accumulation of the circular debt in addition to the governments bad governance The deadline to remove the cap is the end of June according to the report The IMF has also imposed a condition that Pakistan will prepare a plan based on the assessment conducted to fully phase out all incentives in relation to Special Technology Zones and other industrial parks and zones by 2035 The report has to be prepared by the end of this yearFinally in a consumerfriendly condition the IMF has asked Pakistan to submit to the Parliament all required legislation for lifting all quantitative restrictions on the commercial importation of used motor vehicles initially only for vehicles less than five years old by the end of July Currently only cars up to three years old can be importedThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday 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