Finance Ministry says IMF targets are phased reforms, not new conditions

Pakistan’s finance ministry on Sunday clarified that the 11 targets recently described as “new conditions” under the International Monetary Fund’s Extended Fund Facility were part of a phased, ongoing reform agenda, not abrupt policy demands.

The statement followed IMF documents showing Pakistan’s commitment to 11 structural benchmarks, along with two prior actions, which allowed completion of the second EFF review and approval by the IMF Executive Board, releasing $1.2 billion on December 9.

The ministry said the measures reflected continuity, sequencing and deepening of reforms already agreed under the $7 billion programme. Each review of the EFF builds on previous actions, it said, with structural reforms implemented gradually to achieve medium-term policy objectives.

It added that the Memorandum of Economic and Financial Policies (MEFP) finalised after the second review supplemented the first review and largely incorporated initiatives already undertaken or initiated by the government. The IMF assessed these actions as contributing to programme goals rather than imposing new conditions externally.

On specific reforms, the ministry said civil servants’ asset declarations had been part of the EFF since May 2024, with the current benchmark representing the second step after legislative amendments. Commitments to strengthen the National Accountability Bureau and coordinate with provincial anti-corruption bodies were continuations of prior actions. Similarly, empowering provincial anti-corruption establishments through financial intelligence aligned with the AML/CFT agenda, which has been integral to the EFF since inception.

The ministry highlighted remittance reforms, noting inflows rose 26 percent year-on-year from FY24 to FY25, with a further 9.3 percent increase projected in FY26. Efforts to remove bottlenecks in cross-border payments in coordination with the State Bank of Pakistan were incorporated into the MEFP.

An IMF staff report from May 2025 recommended a study to expand the local currency bond market, now formalised as a structural benchmark. Sugar sector deregulation, originating from the government, was included due to its alignment with EFF objectives to reduce state intervention.

Other measures cited included a roadmap for the Federal Board of Revenue, medium-term tax reform strategy linked to the Tax Policy Office, privatisation of distribution companies in phases, amendments to the Companies Act, 2017 to improve compliance, and SEZ reforms following an assessment study. Contingency measures to address potential revenue shortfalls, including a five percent Federal Excise Duty on fertiliser and pesticides, were also part of the MEFP since May 2024.

The ministry concluded that the benchmarks under the EFF represent logical, sequenced steps in Pakistan’s reform agenda rather than sudden or unprecedented conditions.