IMF Approves $1.3 Billion Loan for Pakistan – Complete Details, Waivers, Conditions & New Tax Measures

The International Monetary Fund (IMF) has approved a $1.3 billion loan for Pakistan after granting waivers for several missed conditions. This major development brings relief to Pakistan’s struggling economy and keeps the country’s $8.4 billion IMF programme on track. However, the approval comes with new commitments: Pakistan must introduce fresh tax measures, publish important governance reports, and continue reforms in energy pricing, SOEs, and fiscal management.

This detailed article explains the loan breakup, IMF’s waivers, government commitments, economic impact, missed targets, and upcoming tax decisions, written in easy English with SEO-optimized headings and keywords.

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What the IMF Approved – Full Breakdown of $1.3 Billion

The IMF Executive Board approved:

• $1.1 billion under the Extended Fund Facility (EFF)
• $220 million under the Resilience and Sustainability Facility (RSF)

This support will help Pakistan manage its external financing needs and strengthen the economy during a period of revenue shortfalls and high fiscal pressure.

The loan was cleared after Pakistan fulfilled two prior actions demanded by the IMF:

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H2 — IMF Prior Actions Completed by Pakistan

• Issuing an order to restructure an undercapitalised bank
• Publishing the long-delayed Governance & Corruption Diagnostic Assessment Report

Both steps were politically sensitive but necessary to secure the board meeting date and approval.

Why IMF Granted Waivers to Pakistan

Despite several missed targets, the IMF still approved the loan because Pakistan showed commitment to reforms and macroeconomic stability.

H2 — Waivers Granted on Missed Conditions

The IMF granted waivers on:

• BISP spending target of Rs 599 billion (actual spending was lower)
• Tax target shortfall
• Provincial spending on health and education
• Filing of new income tax returns
• Delays in publishing corruption report
• SOEs legal reforms not completed on time

The IMF recognised Pakistan’s challenges, especially due to flood impacts and slow revenue growth.

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Pakistan’s Economic Performance – What Worked & What Didn’t

Despite missing several structural conditions, Pakistan succeeded in key macroeconomic areas.

H2 — Areas Where Pakistan Met IMF Targets

• Net international reserves improved after SBP purchased $8.4 billion from the local forex market
• Circular debt in the power sector controlled
• Domestic debt maturity increased to reduce refinancing risk
• Eight structural benchmarks achieved, improving governance and stability

The finance ministry also recorded the first primary budget surplus in years, which increased IMF confidence.

Key Conditions Pakistan Failed to Meet

H2 — Missed IMF Conditions

Pakistan could not meet conditions related to:

• Tax collection – FBR missed the target by Rs 413 billion in 5 months
• Provincial spending on health & education
• SOEs reforms – laws not amended on time
• FED on fertiliser & pesticides – not imposed
• Corruption report publication – delayed
• Avoiding new tax exemptions – exemption on imported sugar violated IMF rules

These gaps pushed the IMF to demand new policy measures, including possible tax increases in January.

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IMF Asks Pakistan to Prepare New Taxes

The federal government assured the IMF that:

• New tax policy measures will be introduced if revenue remains below target
• A mini-budget may be needed in January
• Electricity and gas prices will continue to be adjusted regularly
• No further tax exemptions will be granted

H2 — Expected New Taxes in 2026

Possible tax steps include:

• Federal excise duty on fertiliser
• FED on pesticides
• Higher taxes on non-filers
• Increased sales tax on luxury items
• Removal of remaining tax exemptions

This is aimed at closing the massive revenue gap FBR is facing.

Governance and Corruption Assessment Report – Why It Matters

The IMF has been pressing Pakistan for stronger governance, transparency, and anti-corruption reforms.

H2 — Corruption Report Delay & IMF Response

• The report was published late due to “agency consultations.”
• IMF called for an action plan addressing corruption and governance weaknesses.
• Deadline for the action plan is extended to end of this month.

A senior parliamentary committee member even called the report “an indictment of the government.”

Energy Pricing, SOEs & Exchange Rate Policies

H2 — IMF Demands on Energy & State-Owned Enterprises

Pakistan has committed to:

• Continue electricity and gas price adjustments
• Reduce the government’s footprint in the economy
• Amend SOE laws by August next year
• Maintain a flexible exchange rate
• Stronger monetary policy stance to manage inflation

However, recent suggestions from SIFC to cut interest rates may conflict with IMF’s inflation strategy.

Impact of the IMF Loan on Pakistan’s Economy

H2 — Short-Term Economic Impact

• Strengthens foreign reserves
• Supports rupee stability
• Improves investor confidence
• Helps avoid default-like situations
• Provides policy space for reforms

H2 — Long-Term Impact Depends on Reforms

The IMF repeatedly reminded that:

• Stabilisation alone is not enough
• Pakistan must shift toward sustained growth
• Structural reforms must take root
• Corruption and inefficiencies must be reduced

Experts believe Pakistan’s next six months will determine the success or failure of the IMF programme.

Political Reaction Inside the Government

The finance ministry faced criticism from officials who complained the department remained “too strict” with IMF conditions.

But the prime minister praised:

• Finance Secretary Imdad Ullah Bosal
• Entire economic team

Their disciplined approach secured the loan approval at a critical stage.

IMF $1.3 Billion Loan Conditions Explained – Key FAQs