IMF piles on new structural conditions for Pakistan

December 12, 2025 (MLN): The International Monetary Fund (IMF) has added new structural conditions to Pakistan’s $7 billion Extended Fund Facility, taking the total to 64 conditions in just 18 months.

The lender is pushing Islamabad to confront governance failures, curb corruption vulnerabilities, cut SOE losses, and fix deep distortions in key commodity markets, especially sugar and wheat.

The new conditions, detailed in the IMF’s staff-level report for the second review, indicate the Fund’s heightened focus on institutional reforms, improved transparency, and stronger private sector participation.

The IMF said these measures are essential for unlocking sustainable growth, reducing fiscal risks, and breaking entrenched elite capture.

The report shows that governance reforms have entered a new phase.

The government is now required to publish asset declarations of all high-level federal civil servants by December 2026, with plans to expand the obligation to senior provincial officials.

Banks will be given full access to these declarations to verify discrepancies between assets and income.

The National Accountability Bureau (NAB) will lead a comprehensive risk-based action plan by October 2026 targeting the ten highest-risk government agencies.

Provincial anti-corruption establishments will be empowered to receive financial intelligence and strengthen investigation capacity, after the recent Governance and Corruption Diagnostic (GCD) exposed severe systemic weaknesses.

Nearly all nine statutory SOE laws will be amended and submitted to the National Assembly by August 2026, after delays pushed back the original June 2025 deadline.

Amendments to the Sovereign Wealth Fund law must also be adopted by March 2026 to ensure transparent divestment procedures and full alignment with the SOE governance framework.

The IMF noted that the central monitoring unit is now fully staffed and producing regular reports, but transparency remains weak.

All SOEs must adopt business plans, statements of corporate intent, and IFRS-compliant financial statements within the year. Public service obligations (PSOs) must be identified, costed, and contracted before the FY27 budget cycle.

While the approval of a bid for First Women Bank Limited marks progress, the IMF warned that Pakistan must move faster on divestment.

Preparations for a second bidding round for Pakistan International Airlines (PIA) have been underway for over a year, yet remain incomplete.

The first batch of power distribution companies (DISCOs) must also advance to bidding.

To dismantle entrenched interests in the sugar sector, the IMF has mandated the adoption of a National Sugar Market Liberalisation Policy by June 2026.

The federal and provincial governments must jointly agree on a framework addressing licensing rules, trade permissions, zoning restrictions, and the elimination of price controls across the entire value chain.

The Fund called this one of the most critical tests of Pakistan’s willingness to confront political resistance.

The report emphasises the need for non-distortive wheat procurement and transparent management of strategic reserves. Wheat releases will be permitted only during emergencies declared by federal or provincial governments.

The IMF expects reforms to encourage private sector investment and innovation along the agricultural value chain.

Due to repeated underperformance, the IMF has asked Pakistan to publish a comprehensive FBR reform roadmap by December 2025, defining priority areas, staffing needs, revenue impacts, and KPIs.

The authorities are required to fully implement at least three priority reforms by next year, including legislative changes, staff deployment, and initial performance reporting.

A separate medium-term tax reform strategy must also be published by December 2026, outlining the sequencing of tax policy, administration, and legal reforms.

The government must complete the preconditions for private sector participation in HESCO and SEPCO, two loss-making distribution companies, by December 2026.

In addition, public service obligation agreements for the seven largest SOEs must be signed before the next budget is submitted to parliament.

Pakistan will publish a concept note on amendments to the SEZ Act by June 2026, defining the rationale, KPIs, and shift from profit-based to cost-based incentives.

Legislative amendments to the Companies Act must also be submitted to parliament to strengthen governance and transparency for listed and unlisted firms.

Amid projections that remittance costs may rise to $1.5 billion, the IMF has required a comprehensive assessment of cross-border payment bottlenecks and remittance costs by May 2026, along with an actionable solution.

Additionally, a full study on constraints in local currency bond market development must be completed by September 2026, followed by a strategic action plan.

Following discrepancies in Pakistan Bureau of Statistics data, the IMF has directed a comprehensive review of import-related statistics and aggregation methods.

The authorities will continue working on the Government Financial Statistics roadmap, new PPI index development, and three major surveys planned for FY26.

New IMF Structural Conditions at a Glance

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