Pakistan has agreed to a fresh set of structural conditions from the International Monetary Fund (IMF) to secure the next $1.2 billion tranche under its $7 billion Extended Fund Facility (EFF) program, including changes to public procurement rules, energy tariff adjustments, and the gradual withdrawal of fiscal incentives for special economic zones.
As part of the latest commitments, Islamabad will amend rules of the Public Procurement Regulatory Authority (PPRA) by September 2026 to remove preferential treatment currently granted to state-owned enterprises (SOEs) in public contracts worth billions of rupees. The move is aimed at increasing competition and transparency in government procurement.
The government has also agreed to introduce semi-annual gas tariff adjustments from July 2026 and annual electricity tariff revisions from January 2027, signaling continued alignment of energy pricing with IMF-backed reform targets in fiscal year 2026-27.
Incentives for SEZs to Be Phased Out
Under another structural benchmark, Pakistan committed to amending laws governing Special Economic Zones (SEZs) and Special Technology Zones (STZs) to gradually phase out fiscal incentives and shift from profit-based benefits to cost-based support. All incentives, including those linked to the China-Pakistan Economic Corridor (CPEC), will be eliminated by 2035, consistent with the framework proposed in the upcoming Finance Bill 2026.
The IMF’s Executive Board is expected to consider approval of the third review under the EFF program next month, which would unlock the fourth tranche of funding.
Budget Alignment With IMF Framework
Pakistan also committed to securing parliamentary approval of the FY2026-27 budget in line with IMF staff recommendations. An IMF mission is expected in Islamabad next month to finalize the fiscal framework with the finance ministry ahead of the budget announcement.
Separately, the government agreed to amend the National Accountability Bureau (NAB) ordinance by January 2027 to introduce merit-based criteria and a competitive process for senior appointments.
Revenue, FX and Social Spending Targets
To address persistent revenue shortfalls at the Federal Board of Revenue (FBR), Pakistan will implement centralized audit-selection regulations aimed at improving enforcement. The FBR is currently working to meet a revised Rs13.97 trillion tax collection target for the fiscal year ending June 2026.
The government also agreed to increase stipends under the Benazir Income Support Programme (BISP) from Rs14,500 to Rs19,500 starting January 2027, implying higher social protection allocations in the upcoming budget. 🧾
Meanwhile, the State Bank of Pakistan (SBP) committed to preparing a roadmap for the gradual liberalization of the foreign-exchange regime by the first quarter of 2027, signaling further easing of currency-market restrictions.
Islamabad will also establish a Pakistan Regulatory Registry to streamline business regulations at the federal level and in the Islamabad Capital Territory, another benchmark tied to the IMF program.
