IMF imposes 11 new structural benchmarks on Pakistan
TOUGH REFORMS AHEAD
PSMU Desk
ISLAMABAD: The International Monetary Fund (IMF) has introduced 11 new structural benchmarks (SBs) for Pakistan, covering a range of critical reforms in tax policy, governance, the financial sector, and energy. These benchmarks are part of the ongoing Extended Fund Facility (EFF) arrangement and aim to strengthen Pakistan’s economic foundation.
The IMF’s latest report on Pakistan’s second review under the EFF and first review under the Resilience and Sustainability Facility (RSF) revealed that Pakistan had met 8 out of 13 previously agreed-upon structural benchmarks. These included the approval of the fiscal year 2026 budget in line with IMF targets, the implementation of a new agricultural income tax, and the amendment of the Civil Servants Act to enhance public officials’ asset declarations.
However, the IMF has now imposed 11 additional benchmarks, which cover multiple sectors. On the fiscal front, the government is required to finalize a comprehensive roadmap for tax reform by December 2025, detailing key reform areas, staffing requirements, timelines, revenue impact estimates, and key performance indicators (KPIs). Additionally, a medium-term (3-5 years) tax reform strategy must be developed by December 2026, including a sequenced roadmap for tax policy, administration, and legal reforms, along with governance structures and a resource plan for implementation.
In terms of governance, the IMF has called for the publication of asset declarations for high-level federal civil servants by December 2026, in line with legislative amendments aimed at improving transparency. The IMF also requires an action plan to mitigate corruption vulnerabilities within key government departments, based on institutional risk assessments, to be published by October 2026.
On the monetary and financial side, Pakistan must complete a comprehensive assessment of remittance costs and barriers to cross-border payments by May 2026, followed by an action plan to boost foreign exchange inflows. Additionally, a comprehensive study of the bottlenecks to local currency bond market development is required, with a strategic action plan to address these issues by September 2026.
The IMF has also set benchmarks for Pakistan’s energy sector, demanding the finalization of preconditions for private sector participation in power distribution companies HESCO and SEPCO by December 2026, as part of a wider initiative to improve energy sector efficiency.
For State-Owned Enterprises (SOEs), the government is required to sign public service obligation (PSO) agreements with the seven largest SOEs by June 2026. This is expected to improve the transparency and costing of public obligations, in line with updated SOE laws.
In trade and investment policy, Pakistan is required to adopt a national policy for the liberalization of the sugar market by June 2026. This policy will focus on licensing, price controls, and import/export regulations. Additionally, the IMF has called for legislative amendments to the Companies Act, 2017, by June 2026, to strengthen corporate governance for unlisted firms and align regulations with international standards. A concept note on amending the Special Economic Zones (SEZ) Act must also be prepared by June 2026, to improve investment efficiency and ensure a level playing field for investors.
Several earlier targets were delayed but are being reset. These include the publication of an action plan based on the Governance and Corruption Diagnostic (GCD) report, which is now due by December 2025. Similarly, the amendments to statutory laws governing SOEs and the introduction of Federal Excise Duty (FED) on fertilizers and pesticides have been delayed, with new deadlines set for 2026.
Regarding performance criteria, Pakistan met most of the quantitative targets for the second quarter of 2025, including on net international reserves, the domestic assets of the State Bank of Pakistan (SBP), and tax revenue collection. However, a minor shortfall was noted in government spending on health and education, as well as tax revenues, for which the government has requested a waiver.
The IMF’s new benchmarks underscore the tough reform agenda that Pakistan must follow to stabilize its economy and fulfill its commitments under the IMF program. With these reforms spanning multiple sectors, Pakistan faces a challenging road ahead, and the government’s ability to implement these reforms effectively will be critical in ensuring both economic recovery and sustained international support.
