IMF Tightens Grip on Pakistan Amid Rising India Tensions(India Today)
The International Monetary Fund (IMF) has imposed 11 new conditions on Pakistan’s bailout program, raising the total to 50 structural benchmarks. This move comes as tensions escalate between Pakistan and India following India’s Operation Sindoor, a military response to the April 22 Pahalgam terror attack.
Key IMF Pakistan Conditions
The newly added conditions emphasize fiscal discipline and structural reforms:
- Parliamentary Approval of Rs 17.6 Trillion Budget: Pakistan must pass a new budget for fiscal year 2025–26 in line with IMF programme targets by June 2025.
- Agricultural Income Tax Reform: All four provinces must implement new laws by June, including taxpayer identification and registration, compliance improvement plans, communication campaigns, and operational return-processing platforms.
- Governance Action Plan: The government must publish a governance reform strategy based on the IMF’s Governance Diagnostic Assessment.
- Post-2027 Financial Sector Strategy: A long-term plan must be prepared and published outlining institutional and regulatory objectives for the financial sector post-2027.
- Annual Electricity Tariff Rebasing Notification: Must be issued by July to maintain tariffs at cost-recovery levels.
Additional conditions include liberalizing used car imports, enhancing debt servicing surcharges on electricity bills, and implementing reforms in state-owned enterprises.
India’s Stance and Regional Implications
India has expressed concerns over Pakistan’s use of IMF funds, alleging that they indirectly support military intelligence operations and terrorist groups. Foreign Secretary Vikram Misri highlighted these issues during an IMF board meeting, emphasizing Pakistan’s history of failing to fulfill IMF conditions.
The IMF has also warned that escalating tensions between India and Pakistan could jeopardize the success of the bailout program, affecting fiscal, external, and reform goals.
Economic Strain and Future Outlook
Pakistan’s economy is under significant strain, with high external debt, limited foreign exchange reserves, and reliance on international aid. The IMF’s expanded conditions aim to ensure economic stability and successful implementation of the bailout package. However, the geopolitical climate adds complexity to these efforts.
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