ISLAMABAD : The Ministry of Finance has clarified the intent, context, and continuity of reform measures under Pakistan’s IMF Extended Fund Facility (EFF) program, particularly in response to recent commentary regarding so-called “new conditions.” The purpose is to reaffirm that the measures referenced are part of a phased, medium-term reform agenda agreed with the IMF, many of which are extensions or logical progressions of reforms already initiated by the Government of Pakistan.
According to the Finance Ministry, the IMF’s Extended Fund Facility (EFF) is designed to support countries in implementing medium-term structural reforms aimed at achieving agreed policy objectives. These reforms are implemented in a sequenced and step-by-step manner over the duration of the program. Each review builds upon prior actions to ensure that the ultimate policy goals agreed at the outset of the program are achieved.
Accordingly, actions under the EFF are structured as logical steps, with additional measures incorporated at each successive review. The Memorandum of Economic and Financial Policies (MEFP) finalized following the Second Review of the EFF supplements the MEFP agreed during the First Review and reflects this phased approach.
During discussions and negotiations with the IMF, the Government of Pakistan presents its planned policy reform initiatives. Where the IMF assesses that these initiatives contribute to the agreed program objectives, they are incorporated into the MEFP. As a result, many of the structural benchmarks and actions included in the latest MEFP are derived from reforms already undertaken or initiated by the Government of Pakistan, rather than being externally imposed or newly introduced conditions.
In this context, clarification on the eleven measures recently characterized as “new conditions” is provided below:
Public Disclosure of Asset Declarations of Civil Servants
This reform has been part of the EFF program since the initial MEFP in May 2024. The current structural benchmark represents the second step, following the successful legislative amendment to the Civil Servants Act, 1973.
Strengthening NAB’s Operational Effectiveness
Commitments to enhance the National Accountability Bureau’s (NAB) effectiveness and independence, including coordination with provincial anti-corruption establishments, were agreed during earlier reviews. The development of action plans for high-risk agencies is a continuation of this commitment and runs parallel to, rather than stemming from, the Governance and Corruption Diagnostic Assessment Report.
Empowerment of Provincial Anti-Corruption Establishments
Allowing provincial anti-corruption bodies access to financial intelligence aligns with the ongoing Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) reform agenda, which has been integral to the EFF since its inception.
Facilitation of Foreign Remittances
Strengthening remittance inflows is critical to Pakistan’s external stability. Following measures to curb informal channels, remittances increased by 26 percent year-on-year from FY24 to FY25, with a further increase of 9.3 percent projected for FY26. The Government, in coordination with the State Bank of Pakistan, has been working to remove structural bottlenecks in cross-border payments. The IMF has built upon these efforts by incorporating them into the MEFP.
Local Currency Bond Market Development
The IMF staff report published in May 2025 recommended a comprehensive study to identify bottlenecks in the local currency bond market to broaden the investor base. This recommendation has now been formalized as a structural benchmark.
Deregulation of the Sugar Industry
The deregulation initiative originates from the Government of Pakistan. A task force, notified by the Prime Minister’s Office and chaired by the Minister for Power, has been mandated to recommend full liberalization of the sugar market and propose a national policy in consultation with provinces. Given its alignment with the EFF objective of reducing government intervention in commodity markets, the IMF has included this initiative as a structural benchmark.
FBR Comprehensive Reform Roadmap
The development of a comprehensive roadmap for the Federal Board of Revenue (FBR) is part of a broader domestic resource mobilization reform agenda led directly by the Prime Minister. Key actions already taken include approval of the Transformation Plan, establishment of the Tax Policy Office, and strengthening of Compliance Risk Management. This structural benchmark builds upon commitments made with the IMF in May 2024 and March 2025.
Medium-Term Tax Reform Strategy
The requirement to develop and publish a medium-term tax reform strategy is a logical extension of earlier reforms, particularly the establishment and operationalization of the Tax Policy Office to separate tax policy formulation from FBR’s operational functions.
Privatization of Power Distribution Companies (DISCOs)
Privatization of DISCOs has been a core component of the EFF program since its inception and is envisaged to occur in phases. Finalizing preconditions for private-sector participation in HESCO and SEPCO represents the next step following initiation of the process for the first batch of DISCOs. Additionally, the signing of Public Service Obligation (PSO) agreements with the seven largest entities reiterates an earlier program commitment.
Regulatory Reforms and Corporate Compliance
Amendments to the Companies Act, 2017 to strengthen compliance for unlisted firms are part of the broader regulatory reform agenda aimed at improving the business climate, an objective embedded in the EFF from the outset. Similarly, the structural benchmark related to a concept note for amendments to the SEZ Act follows the successful completion of a prior benchmark involving an SEZ assessment study.
Contingency Measures for Revenue Shortfalls
Contingency measures to address potential revenue shortfalls have consistently been part of the MEFP framework since May 2024. The initial MEFP itself included a structural benchmark for introducing a 5 percent Federal Excise Duty on fertilizer and pesticides.
In conclusion, the measures outlined in the latest MEFP represent continuity, sequencing, and deepening of Pakistan’s agreed reform agenda under the IMF’s Extended Fund Facility, rather than the imposition of abrupt or unprecedented conditions.
