Issues statement regarding EFF, says viewing measures as sudden, unexpected reflects lack of factual awareness
Finance Minister Muhammad Aurangzeb speaks during a Reuters interview at the 2025 annual IMF/World Bank Spring Meetings in Washington, DC, US, April 25, 2025. Photo: Reuters/ File
The Ministry of Finance clarified, in a statement on Sunday, that there is nothing new in the IMF’s Extended Fund Facility (EFF) conditionalities. It stated that the Memorandum of Economic and Financial Policies (MEFP) is a continuation of the agreed reform agenda being implemented in a phased manner for the country’s economic stability and sustainable growth.
At the start of the IMF program, the Government of Pakistan presented its proposed reform policies, which the IMF incorporated into the MEFP in phases. The ministry stated that viewing these as sudden or unexpected new conditions reflects a lack of awareness of the facts.
Read: IMF conditionalities
The EFF reflects an agreed medium-term reform strategy, with the government already implementing many of the reforms included in it. Medium-term structural reforms are implemented in phases, with new measures included in each IMF review to gradually achieve the final targets agreed at the start of the program.
The MEFP agreed after the second review is a continuation of the MEFP of the first review, the ministry said. The matter of publication of asset declarations of government employees was included in the EFF from May 2024, with the current structural benchmark being the next logical step after amendments to the Civil Servants Act, 1973.
Improvement in the performance and autonomy of NAB was agreed in previous reviews. Strengthening NAB’s performance and cooperation with other investigative agencies is part of this continuity, a measure that was agreed before the Governance and Corruption Diagnostic Report. Granting provincial anti-corruption establishments access to financial information is part of anti-money laundering and combating the financing of terrorism (AML/CFT) reforms, which have been part of the EFF program from the outset, the ministry clarified.
The government discouraged informal channels to increase remittances, resulting in a 26% year-on-year increase in fiscal year 2025, with a 9.3% increase in remittances expected in fiscal year 2026. The government, in collaboration with the State Bank, is striving to reduce the cost of remittances, with the IMF including these measures in the MEFP.
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The ministry noted that a study for the development of the local currency bond market was recommended in May 2025 and has now been included in the program as a structural benchmark.
Further, the statement highlighted that reforms in the sugar sector are an initiative of Pakistan’s government itself, with the prime minister’s Office constituting a task force under the leadership of the minister for energy. The task force is preparing recommendations in consultation with the provinces. This initiative is aligned with the objectives of the EFF, aimed at reducing government intervention in commodity markets, and the IMF has therefore made it part of the MEFP.
Reforms in FBR are part of the government’s broader revenue enhancement agenda, with the task force being led by Prime Minister Shehbaz Sharif himself, the ministry said. Over the past year, the Transformation Plan was approved, the Tax Policy Office was established, and measures such as improvements in compliance risk management were undertaken.
Separating tax policy from FBR’s operational functions was a major step, with the preparation of the medium-term tax reform strategy being a continuation of this process.
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Privatisation of distribution companies (DISCOs) has also been part of the EFF program since its inception and is to be carried out in phases. Finalising the terms for private sector participation in the privatisation of the Hyderabad and Sukkur electric supply companies is an agreed measure, according to the statement. Public Service Obligation agreements for seven major DISCOs are also a continuation of the agreed measures.
Amendments to the Companies Act, 2017, for regulatory reforms and improvement of the business environment are part of broader reforms. The concept note on amendments to the Special Economic Zones (SEZ) Act is the next stage following the earlier SEZ review study.
Alternative measures in case of potential revenue shortfalls have consistently been part of the MEFP, the ministry noted, with the initial MEFP from May 2024 also including a structural benchmark to introduce a 5% Federal Excise Duty on fertiliser and agricultural pesticides.
