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ISLAMABAD, May 20 (APP):Advisor to the Finance Minister,Khurram Shehzad on Tuesday said that there are no new “conditions” recently imposed by the IMF.
“There are not newly introduced conditions,” Shehzad explained. “They represent the natural progression of reforms already agreed upon when Pakistan signed the MEFP in September 2024.”Each step builds logically on the foundations laid in earlier phases of the program” Advisor to the Finance Minister,Khurram Shehzad in a statement issued here.
He emphasized that each structural benchmark (SB) is part of a sequenced approach to reform, designed in phases and built upon progress achieved in earlier reviews.
“The IMF Executive Board on 9th May 2025 approved the 1st Review under the 37-month, USD 7 billion, Extended Fund Facility (EFF), and the request for a 28-month ,$ 1.4 billion Resilience and Sustainability Facility (RSF).
The IMF recognized our strong program implementation, which has contributed to improved financing conditions, greater external stability, and a continuing economic recovery,” he said.
Shehzad elaborated that the EFF supports medium-term structural reforms, and each review adds logical next steps. “These benchmarks are not surprises—they are deliberate follow-ons to earlier milestones,” he added.
He continued, “For example, the parliamentary approval of the FY26 budget in line with IMF staff agreement is the second step toward our goal of achieving a primary surplus of 2.0% of GDP by FY27. The first step was the FY25 budget, which targeted a 1.0% surplus.”
He noted several other SBs that reflect continuation:
The SB on implementing new AIT laws builds on prior alignment of provincial AIT regimes with federal tax rules.
Making the Captive Power Levy ordinance permanent follows the earlier introduction of the Captive Power Transition Levy,he said.
He said that annual inflation indexation of Kafaalat cash transfers is a continuous benchmark, already implemented in January 2025 and reiterated for 2026.
Electricity and gas tariff notifications are continuous measures supporting cost recovery and preventing circular debt buildup, he said.
Shehzad also addressed new benchmarks introduced in response to recent developments:
“The plan to publish a post-2027 financial sector strategy and the move to remove the cap on the debt service surcharge are based on new realities, including the recent constitutional amendment and the government’s evolving energy sector reform strategy,” he said.
He said that other reforms include, Phasing out incentives in Special Technology Zones and industrial parks by 2035 to ensure a level playing field.
Lifting restrictions on used car imports to reduce trade barriers, consistent with the trade liberalization goals outlined in the September 2024 MEFP,he said.
“These measures reflect Pakistan’s steady and sovereign commitment to economic reform and transparency—not externally imposed demands,” Shehzad asserted.
On the RSF, he confirmed that the remaining 13 actions fall under this separate climate-resilience-focused facility, also approved by the IMF Executive Board.
Turning to recent discussions around defense spending, Shehzad clarified:
“The Rs 2.414 trillion defense budget cited in the IMF’s staff report is an absolute projection. However, it is clear that defense expenditure remains constant at 1.9% of GDP from FY25 onward. There has been no significant change in the proportion of GDP allocated.”
Finally, addressing the mention of India-Pakistan tensions in IMF documentation, Shehzad offered a balanced perspective:
“The IMF report identifies regional tensions as a potential risk, as is customary in such assessments. But it also notes that market response has been modest—Pakistan’s stock market has retained most of its recent gains, and financial spreads have only widened moderately,” he said.
“We view this as a reflection of investor confidence in Pakistan’s macroeconomic path. Constructive diplomatic and economic engagement in the region, including with neighbors, remains essential. We continue to pursue stability and responsible governance that supports long-term growth for the country and region alike,” he concluded.