Pakistan has agreed to a new set of policy measures proposed by the International Monetary Fund in a bid to secure the next $1.2 billion tranche under its $7 billion loan programme.
The conditions were finalised ahead of the IMF Executive Board’s upcoming review, which will evaluate Pakistan’s third programme assessment and consider the release of further funds.
The reform agenda includes 11 key conditions spanning procurement, taxation, energy pricing, and institutional governance. These steps are also tied to Pakistan’s commitments under the IMF’s Resilience and Sustainability Facility.
A central component of the plan involves overhauling procurement practices by September 2026 to ensure equal treatment of public and private sector entities in government contracts.
In the energy sector, Pakistan has agreed to implement periodic adjustments to gas and electricity tariffs, a move aimed at reducing fiscal imbalances but likely to increase costs for consumers.
The government has also committed to revising laws governing Special Economic Zones and Special Technology Zones. Under the plan, tax incentives will be gradually withdrawn and replaced with cost-based support, with complete elimination targeted by 2035.
On fiscal policy, authorities have pledged to align the 2026-27 budget with IMF recommendations, with further discussions expected during an upcoming IMF mission to Islamabad.
Reforms in governance include proposed amendments to accountability laws to introduce merit-based appointments. Meanwhile, the Federal Board of Revenue will adopt a centralised audit selection system to address inefficiencies in tax collection.
The FBR continues to face challenges in meeting its revenue targets, highlighting ongoing fiscal pressures.
Social protection measures are also part of the agreement. Payments under the Benazir Income Support Programme are set to increase from January 2027, reflecting efforts to cushion vulnerable segments of society.
Additionally, the State Bank of Pakistan will develop a roadmap for gradual liberalisation of the foreign exchange regime, indicating a shift towards a more market-based currency system.
The government also plans to introduce a regulatory registry to streamline business procedures and improve the ease of doing business.
While the measures are expected to support macroeconomic stability and unlock external financing, analysts caution that implementation will be critical, particularly given the potential impact on inflation and economic growth.
