The International Monetary Fund (IMF) has reportedly imposed 11 new conditions on Pakistan for the release of the next tranche of its bailout programme following the recent standoff with India.
New conditions include the parliamentary approval of a new Rs 17.6 trillion budget, an increase in the debt servicing surcharge on electricity bills and lifting restrictions on the import of more than three-year-old used cars.
The IMF
Markets calm after period of deep uncertainty
The IMF report noted that despite a significant escalation in India-Pakistan tensions over the past two weeks, market response remained subdued, with Pakistan’s stock market holding most recent gains and bond spreads widening only slightly.
The report projected Pakistan’s defence budget for the next fiscal year at Rs 2.414 trillion ($8.5 bn), a 12 per cent increase (Rs 252 billion) over the previous year. However, following recent confrontations with India in early May, the Pakistani government signalled a defence allocation exceeding Rs 2.5 trillion, 18 per cent above the IMF’s estimate.
reportedly released its Staff Level report on Saturday, in which the institution said that “rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten risks to the fiscal, external and reform goals of the programme”. It also warned that increasing tensions with India could expose the IMF bailout programme’s fiscal, external, and reform goals to external risks.
India’s Operation Sindoor
India carried out precision strikes under ‘ Operation Sindoor ’ on terror infrastructure early on May 7 in response to the April 22 Pahalgam terror attack that killed 26 people. Following the Indian action, Pakistan attempted to attack Indian military bases on May 8, 9 and 10.
India and Pakistan reached an understanding on May 10 to end the conflict after four days of intense cross-border drone and missile strikes.
The Express Tribune report said that the IMF slapped 11 more conditions on Pakistan, taking the total conditions to 50.
It has imposed the new condition of securing “parliamentary approval of the fiscal year 2026 budget in line with the IMF staff agreement to meet programme targets by end-June 2025”.
The IMF report has shown the total size of the federal budget at Rs 17.6 trillion, including Rs 1.07 trillion for development spending.
