ISLAMABAD:
The Ministry of Finance clarified on Monday that the 11 newly introduced structural benchmarks by the International Monetary Fund (IMF) are not additional conditions but logical extensions of Pakistan’s ongoing $7 billion Extended Fund Facility (EFF) programme.
In a detailed statement, the ministry explained that these benchmarks represent a continuation of the broader reform agenda outlined in the Memorandum of Economic and Financial Policies (MEFP) agreed upon in September 2024. Some measures, it said, were introduced due to developments occurring after the MEFP was finalized.
Among the additions are a requirement to draft a transition plan for an interest-free economy and the removal of the debt service surcharge cap—adjustments the ministry said were necessary due to constitutional and policy changes made since the last agreement with the IMF.
For instance, the benchmark requiring a new Post-2027 Financial Sector Strategy was prompted by the 26th Constitutional Amendment passed in October 2024, which mandates the phasing out of the interest-based financial system. This amendment was enacted as part of an agreement with the Jamiat Ulema-e-Islam to secure support for the amendment.
The IMF stated that a clear roadmap for eliminating riba (interest) by January 2028 is essential for maintaining financial stability and providing clarity to financial institutions, investors, and regulators during the transition.
The Finance Ministry affirmed that it would lead the development of this strategy in collaboration with the State Bank of Pakistan (SBP), with work beginning by October 2025. The plan is expected to be completed by June 2026.
The ministry further explained that several so-called “new” benchmarks were already scheduled under previous agreements. For example, consultation with the IMF on the FY2026 budget aligns with existing fiscal consolidation goals, including achieving a 1.7% primary surplus.
Taxation reforms targeting agricultural income, set to take effect from July 2025, were also included in the September 2024 MEFP. Similarly, increases to the Benazir Income Support Programme (BISP) under the Kafalat Programme were a continuation of prior commitments, not newly introduced conditions.
The benchmark to publish a Governance Diagnostic Assessment was described as a follow-up step from earlier reform pledges, while legislation to permanently apply a levy on captive power usage stems from the September 2024 agreement aimed at reducing off-grid energy generation.
Additionally, recurring tariff adjustments for electricity and gas—part of efforts to manage circular debt—were classified as ongoing and repeated annually under the existing programme.
The removal of the debt service surcharge cap, the ministry said, was linked to the government’s new plan to convert up to 80% of Central Power Purchasing Agency (CPPA) arrears into sovereign debt—a development postdating the MEFP, and thus added during the current review.
Eliminating tax incentives for Special Technology Zones (STZs) by 2035 expands earlier commitments made for Special Economic Zones (SEZs) and Export Processing Zones (EPZs), aiming to ensure fair competition for investment across all sectors.
Regarding used car imports, the government will gradually lift restrictions for vehicles less than five years old, subject to safety and environmental standards—a progression consistent with its earlier pledge to reduce non-tariff trade barriers.
In conclusion, the ministry emphasized that the EFF programme is structured to support phased, medium-term reforms. Each IMF review builds on the last, meaning that the benchmarks introduced now represent a natural progression of previously agreed objectives.
