ISLAMABAD: The International Monetary Fund (IMF) has introduced 11 new structural benchmarks (SBs) for Pakistan as part of its latest review under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF). These benchmarks span tax reforms, governance, monetary policy, energy, state-owned enterprises, trade, and investment regulations—aimed at strengthening economic stability, transparency, and long-term fiscal sustainability.
Key New Conditions Set by the IMF
Tax Reforms & Fiscal Management
The IMF has directed Pakistan to:
- Finalize a detailed reform roadmap by December 2025 outlining priority tax reforms, staffing needs, timelines, milestones, revenue impacts, and KPIs such as audit targets and digital invoicing coverage.
- Publish a comprehensive 3–5 year tax reform strategy by December 2026, covering policy, legal, and administrative overhauls with clear governance and resource requirements.
The IMF noted that 8 of the 13 earlier benchmarks were met, including the approval of the FY26 budget, implementation of agricultural income tax, and amendments to the Civil Servants Act.
Governance & Anti-Corruption Measures
The new governance benchmarks include:
- Publishing asset declarations of high-level federal civil servants by December 2026.
- Issuing a corruption-mitigation action plan following institutional risk assessments by October 2026.
A delay in publishing the Governance and Corruption Diagnostic (GCD) was acknowledged, with the related action plan reset for December 2025.
Monetary & Financial Sector
The IMF has required Pakistan to:
- Complete an assessment of remittance costs and cross-border payment barriers by May 2026, followed by an action plan to enhance FX inflows.
- Publish a strategy to strengthen the local currency bond market by September 2026, identifying bottlenecks and investor-base diversification measures.
Energy Sector
Pakistan must:
- Finalize prerequisites for private-sector participation in HESCO and SEPCO by December 2026, a step aimed at improving distribution companies’ performance and financial viability.
State-Owned Enterprises (SOEs)
By June 2026, the government must:
- Sign Public Service Obligation (PSO) agreements with the seven largest SOEs, aligning them with updated SOE Act guidelines to enhance transparency in public-service costing.
Some earlier SBs related to amending SOE laws were missed due to legislative delays and have been rescheduled to August 2026.
Trade, Investment Policy & Deregulation
The IMF outlined several reform requirements, including:
- A national sugar market liberalization policy by June 2026, addressing licensing, pricing, import/export rules, and zoning.
- Amendments to the Companies Act, 2017 by June 2026 to modernize governance, reduce regulatory uncertainty, and support capital markets.
- A concept note on Special Economic Zones (SEZs) by June 2026, shifting incentives from profit-based to cost-based models.
The earlier SB on phasing out SEZs was missed but later completed in October 2025.
Performance Criteria & Targets
The IMF reported that Pakistan met six of seven quantitative performance criteria (QPCs) for June 2025, including targets on NIR, NDA, government guarantees, and tax return filings.
However, the BISP spending criterion was narrowly missed due to administrative savings, prompting a waiver request.
Several indicative targets—particularly those related to health/education spending, FBR revenue, and provincial deficits—were also missed.
Authorities’ Commitments
Pakistani authorities affirmed progress on:
- Carbon levy implementation and EV policies under the RSF.
- Taking resolution action against undercapitalized banks failing to meet requirements by March 2025.
- Implementing excise duties on fertilizers and pesticides if revenue shortfalls emerge, despite delaying the measure due to agricultural and flood-related challenges.
They also acknowledged missing the continuous SB on avoiding tax exemptions due to duty-free sugar imports, but committed to sugar sector deregulation.
Story by Tahir Amin
