The Ministry of Finance on Sunday rejected reports of the International Monetary Fund (IMF) imposing stringent new conditions on Pakistan it the latest Memorandum of Economic and Financial Policies (MEFP), maintaining these are a natural continuation of the agreed upon reform agenda.
In a statement, the Finance Ministry said the reforms are being implemented in a phased manner to ensure economic stability and sustainable growth. It stressed that portraying them as sudden or unexpected new conditions reflected a misunderstanding of the facts.
According to the ministry, the measures being reported as “new conditions” are neither sudden nor unexpected. Rather, it stressed, they are part of a medium-term reform strategy agreed between Pakistan and the IMF, many elements of which the Government of Pakistan initiated itself.
It said the IMF’s Extended Fund Facility enables member countries to implement medium-term structural reforms to achieve agreed policy objectives. These reforms are not introduced all at once but are implemented gradually over the course of the program. Under this approach, EFF measures are divided into logical phases. With each review, new actions are incorporated to progressively achieve the final objectives agreed at the start of the program. Accordingly, the MEFP agreed after the second review builds upon and completes the MEFP of the first review.
During negotiations with the IMF, the Government of Pakistan also presents its own proposed reform policies, with the IMF incorporating them into the MEFP if it determines that these support the objectives of the EFF. This, emphasized the Finance Ministry, is why many structural measures in the latest MEFP are initiatives the government had already launched or was in the process of implementing. It then went on to clarify facts about the “new conditions” highlighted by the media.
Publication of Asset Declarations of Civil Servants
This issue has been part of the MEFP since the start of the EFF program in May 2024. The current structural benchmark is the next logical step following amendments to the Civil Servants Act, 1973, already successfully completed.
Improving NAB’s Performance and Autonomy
In previous reviews, the government had already agreed to strengthen the effective functioning of the National Accountability Bureau (NAB) and enhance cooperation with other investigative bodies, particularly provincial anti-corruption institutions. The preparation of action plans for high-risk institutions is part of this ongoing process and runs in parallel with reforms agreed ahead of the Governance and Corruption Diagnostic Report.
Access to Financial Information for Provincial Anti-Corruption Bodies
Providing provincial institutions with financial information to investigate financial aspects of corruption is part of Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) reforms included since the beginning of the EFF program.
Increase in Workers’ Remittances
Remittances are critical to Pakistan’s external financial stability. Following efforts to discourage informal channels, remittances increased by 26% in fiscal year 2025 compared with fiscal year 2024, with a further 9.3% increase projected for fiscal year 2026. The government, in coordination with the State Bank of Pakistan, is removing barriers to reduce the cost of remittance transfers. The IMF has incorporated these measures into the MEFP to further strengthen them.
Development of the Local Currency Bond Market
An IMF staff report issued in May 2025 recommended a comprehensive study of barriers in the local bond market to broaden the investor base. This recommendation has now been included in the program as a structural benchmark.
Deregulation of the Sugar Industry
Reforms in the sugar sector are a government-led initiative. The Prime Minister’s Office has established a task force headed by the Minister for Energy to prepare recommendations, in consultation with provinces, for full liberalization of the sugar market and a national policy. As this aligns with the EFF objective of reducing government intervention in commodity markets, the IMF has included it in the MEFP.
Comprehensive Reform Roadmap for the FBR
Reforms in the Federal Board of Revenue (FBR) are part of the government’s broader revenue-enhancement agenda led by the prime minister. Over the past year, key steps have included approval of a transformation plan, establishment of a Tax Policy Office, and improvements in compliance risk management. The structural benchmark aims to further consolidate these reforms.
Medium-Term Tax Reform Strategy
Following the establishment of the Tax Policy Office, separating tax policy from FBR’s operational functions was a major reform. The preparation of a medium-term tax reform strategy is the natural next step in this process.
Privatization of Power Distribution Companies
Privatization of electricity distribution companies has been part of the EFF program since its inception and is to be carried out in phases. Finalizing terms for private sector participation in HESCO and SEPCO is the next step after the initial phase. Similarly, public service obligation agreements with seven large entities are a continuation of pre-agreed measures.
Regulatory Reforms and Improvement of the Business Climate
Amendments to the Companies Act, 2017, to strengthen compliance for unlisted companies are part of broader business climate reforms included since the start of the EFF. Likewise, the concept note on amendments to the SEZ Act represents the next stage following an earlier SEZ review study.
Contingency Measures in Case of Revenue Shortfalls
Contingency measures in case of potential revenue shortfalls have been a consistent feature of the MEFP. Even the initial MEFP from May 2024 included a structural benchmark to introduce a 5% federal excise duty on fertilizers and pesticides.
In summary, the Finance Ministry has emphasized that the measures included in the latest MEFP are a natural continuation of the reform agenda agreed between the Government of Pakistan and the IMF. They are being implemented in a phased manner to achieve economic stability and sustainable growth, and portraying them as sudden or unexpected new conditions is contrary to the facts.