IMF sets 11 new structural benchmarks for Pakistan, including tax reforms, asset disclosures

The International Monetary Fund (IMF) has imposed 11 new structural benchmarks (SBs) on Pakistan, expanding the scope of required reforms across taxation, governance, financial markets, state-owned enterprises, and trade policy as part of its latest review under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF), Business Recorder reported. 

The details were released in the IMF’s report titled “Second review under the extended arrangement under the EFF, first review under the RSF, request for waiver of non-observance of a performance criterion, and modification of performance criteria.” 

The Fund confirmed that eight of 13 previous benchmarks were met, including approval of the FY2026 budget in line with programme targets, implementation of agricultural income tax, and legislative amendments to strengthen asset declaration rules for public officials.

The IMF requires Pakistan to finalise a detailed tax-reform roadmap by December 2025, covering key priorities, staffing needs, timelines, estimated revenue impact, and KPIs such as audit numbers and digital invoicing coverage. 

By March 2026, Pakistan must implement at least three priority reforms agreed with the IMF staff to enhance the Federal Board of Revenue’s effectiveness.

By December 2026, Pakistan must also publish a comprehensive 3–5 year tax reform strategy, including sequenced policy and legal changes, governance structures, and resource requirements to strengthen predictability of tax revenue.

Governance and anti-corruption benchmarks

The Fund has mandated:

• Publishing asset declarations of high-level federal civil servants on a government website by December 2026, in line with recent legislative amendments.
• Publishing an action plan to mitigate corruption vulnerabilities in high-risk departments following institutional risk assessments (due October 2026).

Monetary and financial-sector reforms

The benchmarks include:

• A comprehensive assessment of remittance costs and barriers to cross-border payments, alongside an action plan to boost FX inflows (due May 2026).
• A study on bottlenecks in local-currency bond markets and publication of a strategic plan to improve market depth and diversify the investor base (due September 2026).

Energy and SOE benchmarks

On the energy side, Pakistan must finalise preconditions for private-sector participation in HESCO and SEPCO by December 2026, aimed at improving distribution company efficiency.

On state-owned enterprises, the government must sign public service obligation (PSO) agreements with the seven largest SOEs before submitting the FY2027 budget. The IMF says this will improve transparency around the cost of public mandates.

Trade, investment and deregulation reforms

The Fund has added multiple benchmarks for June 2026:

1. A national sugar-market liberalisation policy, covering licensing, price controls, import/export rules, and zoning.
2. Legislative amendments to the Companies Act, 2017 to strengthen compliance, modernise governance and support capital-market development.
3. A concept note for SEZ Act amendments, including KPIs and a shift from brackly news-based to cost-based incentives.

Missed, reset, and replaced benchmarks

The IMF noted that several SBs were missed or delayed:

• The benchmark on publishing the Governance and Corruption Diagnostic (GCD) was not met on time but completed as a prior action.
• The related SB on publishing an action plan is reset to December 2025.
• The SB on phasing out SEZs was missed but completed in October 2025.
• Amendments to laws for statutory SOEs were delayed and moved to August 2026.
• A continuous SB on avoiding tax exemptions was breached due to concessions on sugar imports, though the government has committed to full deregulation of the sugar sector.

The excise duty on fertiliser and pesticides, a revenue measure, was also missed due to concerns about burdening farmers following floods, but will be imposed if revenue shortfalls emerge.

Performance criteria and indicative targets

Pakistan met six of seven quantitative performance criteria for end-June 2025, including:

• Floors on SBP net international reserves
• Limits on government guarantees
• Ceilings on SBP net domestic assets and FX swap positions
• Primary budget deficit ceiling
• Target for new tax return filers

The only missed PC was the small shortfall in BISP spending—Rs463 million, attributed to administrative savings.

For indicative targets, four were met, including domestic debt maturity, provincial tax collections and power-sector arrears. However, targets on health and education spending, FBR net tax revenues, provincial primary deficits, and tax refund arrears were missed.

Authorities’ commitments

Pakistani authorities told the Fund they remain committed to completing legislative reforms for SOEs by August 2026 and will impose the excise duty on fertiliser and pesticides if required.