Pakistan’s latest $7 billion bailout program with the International Monetary Fund (IMF) has come with a stringent and expanding set of obligations, now totaling 64 conditions that must be met within the next 18 months.
Thank you for reading this post, don't forget to subscribe!Following the approval of a $1.2 billion tranche, the IMF ratcheted up pressure by introducing 11 new conditions. These new requirements are specifically designed to address systemic issues in governance, stamp out corruption, and curb the influence of powerful business groups (cartels).
Deepening Structural Reforms
As one of the IMF’s largest borrowers, Pakistan remains critically dependent on external financing to stave off a loan default. The IMF has made it clear that continued support requires a fundamental overhaul of the nation’s economic and administrative landscape. The new conditions target crucial, often politically sensitive, sectors:
1. Combating Corruption and Enhancing Transparency
- Asset Disclosure: A landmark requirement mandates the declaration and publication of assets for senior federal civil servants by the end of this year, a requirement that will later extend to provincial officials.
- Anti-Corruption Strategy: Pakistan must formulate action plans to tackle corruption across 10 high-risk government departments and strengthen provincial anti-corruption units, granting them access to vital financial intelligence.
2. Reforming Key Economic Sectors
- Tax Machinery Overhaul: Islamabad is required to submit a comprehensive reform roadmap for the Federal Board of Revenue (FBR) and establish a medium-term tax reform strategy. Furthermore, the IMF insisted on a provision for a “mini-budget” next year should revenue collections fall short of targets.
- Power Sector Efficiency: The government must address massive losses in the power sector and meet the prerequisites necessary for facilitating private-sector participation in electricity distribution companies.
- Cartel Crackdown: To challenge politically connected business groups, particularly in the sugar industry, Pakistan has been asked to implement a national sugar market liberalisation policy.
- Corporate Governance: The conditions also include critical amendments to the Companies Act and changes to the Special Economic Zones (SEZ) Act to improve corporate governance standards.
These 64 conditions underscore the steep price Pakistan must pay for financial stability, necessitating challenging and potentially unpopular structural reforms to fix its tattered economy.
