Pakistan can expect tougher times as it continues to rely on international bailout packages. The country’s latest bailout package comes with tougher terms and conditions. The IMF has imposed 11 new conditions on Pakistan as a result of its $7 billion bailout package deal, taking the total number of conditions to 64 within an 18-month period.
IMF approved a new loan amounting to approximately $1.2 billion. Specifically, $1 billion out of it will be drawn from the Extended Fund Facility. Add to that, an extra $200 million will be sourced from the Resilience and Sustainability Facility. Nonetheless, the IMF included a warning with its approval. As cited, there is “a waiver of non-observance of a performance criterion.”
Although there is “strong programme implementation” in Pakistan, challenges and weaknesses exist, as stated by the IMF. Inflation rates remain high because of recent floods, which have caused an increase in food prices, and financial pressures on households remain very high.
New conditions focus on corruption and control by the elite
The 11 new conditions include, as reported by IMF and Pakistani sources, a focus on controlling corruption, enhancing transparency, and overcoming elite control within vital sectors.
Key requirements include:
Public disclosure of Declarations of Assets made by Senior Officials by December 2026.
Tighter supervision of provincial bureaucrats and complete freedom for banks to access filings on assets.
A coordinated anti-corruption action plan for 10 major government departments, headed by the National Accountability Bureau.
Granting powers for financial probes to provincial anti-corruption agencies.
These steps are among the strongest moves ever made by the IMF to pressure Pakistan’s government and administrative system regarding governance reforms.
Remittances and sugar market reforms
The IMF has also sought a review of rising remittances costs, which are the country’s biggest source of foreign inflows, and an action plan on it by next May. Remittances costs may touch $1.5 billion, and IMF Board members have expressed concern about obstacles being created for international payments.
Another significant intervention focuses on the influential sugar sector. To eliminate decades of dominance, Pakistan needs a national sugar market liberalization policy no later than June 2026. It will affect licensing, pricing, and regulations on exporting and importation.
Nevertheless, a more serious economic crisis lurks in the background.
Its public debt has gone beyond $307 billion, with foreign liabilities making up a considerable proportion. The IMF has constantly warned that without perseverance on the side of discipline, it may drift again into instability.
Foreign exchange reserves have been strengthened to $14.5 billion compared with $9.4 billion a year ago, but according to the Fund, it remains short-term and ineffective.
The recent flood incidents have added to the burden on Pakistan’s economy, which is already struggling. The IMF made it clear that it cannot postpone its focus on making its economy resilient against climate change any more. The problem of Pakistan tackling challenges posed by natural disasters and rebuilding itself has thus turned into an economic challenge.
Regional implications
Regarding India and South Asia as a whole, the latest IMF observations have reiterated worries about Pakistan’s habit of getting caught up in financial crises and its practices regarding IMF bailouts and implementation of IMF recommendations. India’s stance on IMF bailouts, which have failed to bring about stability without bringing about change, dates back some years.
ALSO READ: Rupee Falls Beyond 90 As RBI Allows Gradual Adjustment
The road ahead
The EFF programme, approved in September 2024, and RSF facility, approved in May 2025, with a period of 39 months, are aimed at stabilization and ensuring climate changes. However, it is evident that Pakistan will have to fulfill all its pre-requisites if it wishes to receive more loans from IMF as per its review process conducted during its second review. Despite these new injections of money, the IMF message remains very clear: It appears that there are very serious problems with the Pakistani economy, that it is on very shaky ground, and that it will have to make some very serious changes if it wants to avoid another
FOR MORE: https://civiclens.in/category/international-news/
About the Author
