Business Recorder
EDITORIAL: According to a section of the media, the International Monetary Fund (IMF) has added eleven new conditions to the ongoing 7 billion dollar Extended Fund Facility (EFF) programme, which reportedly have been accepted by the Pakistani authorities. The IMF announced a staff level agreement (SLA) was reached on the third review under the ongoing 7 billion dollar Extended Fund Facility programme on 27 March 2026 but no Board date has been announced yet that would have presaged a tranche release (followed by uploading detailed documents including the precise conditions agreed to). The gap between the SLA and failure to set the Board date naturally fuels speculation that politically challenging prior conditions would have to be implemented before the tranche release. However, in the current instance, the delay could well be because of the oil supply disruptions due to the Middle East conflict, a view supported by 9 April IMF Managing Director Kristalina Georgieva’s pledge that during the spring meeting (13 to 17 April) “our focus will be on how best to weather this latest shock and ease the pain on economies and people. This requires understanding the nature of the shock, the channels through which it affects the economy, the size of the impact, and the policies that can mitigate it.” Pakistan as an oil importer has been particularly badly hit and one would hope for condition revisions to ease the pain on our economy and people. One condition that was cited is the enactment of an amendment to the Special Economic Zones (SEZ) Act and the Special Technology Zones Authority Act to phase out existing fiscal incentives and shift from profit-based to cost-based incentives. What was extremely disturbing was the report that the government intends to give 6000 acres in Karachi on lease to developers of SEZs without charge; however, it is relevant to note that the October 2024 IMF documents on the EFF approval observed that the “tax system has been extensively used to provide non-transparent support through exemptions for privileged sectors like real estate, agriculture, manufacturing, and energy, as well as, through the proliferation of Special Economic Zones (SEZs).” The condition was that existing SEZs would be phased out over a decade while no new SEZs will be set up. Another of the reported new conditions is related to setting up a regulatory registry to improve the business climate. This too is a condition contained in the October 2024 documents wherein the government pledged to “ensure the highest level of transparency in all public procurement at the federal and provincial levels through the electronic Pakistan Acquisition and Disposal System (e-PADS), established with TA support from the World Bank. The Pakistan Public Procurement Regulatory Authority (PPRA) is expanding the e-PADS to federal agencies and provincial governments. Since the e-PADS was launched in 2023, a total of 38 of the 43 federal ministries and 342 attached departments are integrated into the system.” Conditions agreed relating to the energy sector relate to full-cost recovery, be it from borrowing or a result of inefficiencies, are being fully implemented as are the policies relating to centralizing the audit case selection process. There was a consensus that the IMF must have agreed to the subsidies announced by the government to mitigate the impact of the oil supply disruptions due to the Middle East conflict and the report suggested that this had indeed been done. Pakistan is playing a critical role in resolving the Middle East conflict and that is the best way forward; however, as noted by the Minister for Planning Ahsan Iqbal, the scale of the impact on our economy is already considerable, which would necessitate a revision of some of the harsh upfront conditions. One way out would be to slash current expenditure that would ease the pressure to borrow more externally and domestically – an uptick that is evident whose cost would have to be borne by the hapless public. Copyright Business Recorder, 2026
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