IMF EFF measures part of ongoing reforms, Govt says

December 15, 2025 (MLN): The reforms outlined in the latest review of the International Monetary Fund’s (IMF) Extended Fund Facility (EFF) are neither new nor externally imposed, but rather part of a phased reform agenda agreed with the IMF at the outset of the program in May 2024.

In a detailed clarification, the Ministry of Finance said recent commentary had mischaracterized the structural benchmarks included in the Memorandum of Economic and Financial Policies (MEFP) finalized following the second EFF review, according to a press release.

It stressed that the EFF is designed to support medium-term structural reforms implemented in a sequenced manner, with each review building on earlier commitments to achieve agreed policy objectives.

The ministry said reforms under the program are discussed during negotiations with the IMF, and initiatives proposed by the government are incorporated into the MEFP where they align with program goals.

As a result, many of the benchmarks included in the latest MEFP show reforms already initiated or approved by the government, rather than new requirements introduced by the IMF.

Addressing 11 measures that had been described as “new conditions,” the ministry said public disclosure of asset declarations by civil servants has been part of the EFF since the initial MEFP.

The current benchmark represents a second step following legislative amendments to the Civil Servants Act, 1973.

Measures to strengthen the operational effectiveness of the National Accountability Bureau including coordination with provincial anti-corruption establishments and preparation of action plans for high-risk agencies, were agreed during earlier reviews.

The ministry said these steps run parallel to, and are not derived from, the Governance and Corruption Diagnostic Assessment Report.

The empowerment of provincial anti-corruption bodies through access to financial intelligence was described as consistent with Pakistan’s ongoing Anti-Money Laundering and Countering the Financing of Terrorism reform agenda.

This reform agenda has been integral to the EFF since its inception.

On foreign remittances, the ministry said strengthening inflows is central to external sector stability.

Following measures to curb informal channels, remittances rose 26% year-on-year from FY24 to FY25, with a further 9.3% increase projected for FY26.

It said the government, working with the State Bank of Pakistan, has been removing structural bottlenecks in cross-border payments, and these efforts were subsequently incorporated into the MEFP.

The ministry said development of the local currency bond market stems from an IMF staff recommendation published in May 2025 for a comprehensive study to identify bottlenecks and broaden the investor base.

This recommendation has now been formalized as a structural benchmark.

Deregulation of the sugar industry was described as a government-led initiative.

A task force notified by the Prime Minister’s Office and chaired by the Minister for Power has been mandated to recommend full liberalization of the sugar market and propose a national policy in consultation with provinces.

The IMF included this initiative as a benchmark due to its alignment with EFF objectives of reducing state intervention in commodity markets.

The clarification also covered tax administration reforms. The ministry said development of a comprehensive reform roadmap for the Federal Board of Revenue is part of a domestic resource mobilization agenda led by the prime minister.

Measures already taken include approval of the FBR Transformation Plan, establishment of the Tax Policy Office, and strengthening of compliance risk management.

The benchmark builds on commitments made with the IMF in May 2024 and March 2025.

Similarly, the requirement to develop and publish a medium-term tax reform strategy was described as a logical extension of earlier steps particularly the operationalization of the Tax Policy Office to separate tax policy formulation from FBR’s operational functions.

In the power sector, the ministry said privatization of electricity distribution companies has been a core EFF component since the program’s outset and is planned in phases.

The latest benchmarks relate to finalizing preconditions for private-sector participation in Hyderabad Electric Supply Company and Sukkur Electric Power Company, following initiation of the process for the first batch of DISCOs.

The signing of public service obligation agreements with the seven largest entities was also cited as a reaffirmation of earlier commitments.

Regulatory reforms were also addressed. Amendments to the Companies Act, 2017 aimed at strengthening compliance requirements for unlisted firms were highlighted.

These changes were described as part of a broader effort to improve the business climate, an objective embedded in the EFF from the beginning.

A benchmark related to a concept note for amendments to the Special Economic Zones Act was said to follow completion of an earlier SEZ assessment study.

On fiscal safeguards, the ministry said contingency measures to address potential revenue shortfalls have consistently been part of the MEFP framework since May 2024.

It noted that the initial MEFP included a structural benchmark for introducing a 5% federal excise duty on fertilizer and pesticides.

The ministry said the latest MEFP shows continuity, sequencing, and deepening of Pakistan’s agreed reform agenda under the IMF EFF.

This came at a time when investors and markets are closely tracking fiscal consolidation, revenue measures, governance reforms, and progress on structural changes tied to macroeconomic stability.

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