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IMF Demands Strict Reforms in Federal, Provincial Budgets
IMF urges Pakistan to end energy subsidies, reduce govt spending, and tax agri/services in upcoming budgets. Provinces must provide written guarantees.
ND
by News Desk
2025-06-04
IMF Demands Strict Reforms in Federal, Provincial Budgets

As budget negotiations between Pakistan and the International Monetary Fund (IMF) intensify, fresh and stringent demands from the global lender have surfaced, placing added pressure on both the federal and provincial governments ahead of the 2025 fiscal year.

According to sources familiar with the talks, the IMF has asked that all prior agreed conditions be fully reflected in the upcoming federal and provincial budgets. This includes written guarantees from provincial governments ensuring measures aimed at reducing expenses and improving the business climate.

A key point of contention is the IMF’s demand to eliminate all subsidies on electricity and gas. The Fund has also called for a halt to new public sector recruitments through a "rightsizing" strategy, pushing provinces to reduce workforce expansion and control government spending.

The IMF insists that budgetary targets must be met through a consensus among political parties represented in the parliament. It has urged both the federation and provinces to present a unified, practical approach to stop electricity and gas theft, as well as cross-border smuggling.

In a notable addition, the IMF has asked provincial governments to incorporate action plans into their budgets for expanding the tax base — specifically, implementing taxation on agricultural income and service sectors.

Observers say these demands reflect the IMF’s push for fiscal discipline and structural reforms ahead of a possible new loan programme or continued disbursement of funds. However, the timing and political implications of such austerity measures could pose significant challenges for the coalition government, particularly in a pre-election climate.

If implemented, the IMF's conditions could reshape Pakistan’s economic landscape but may also face resistance from various political and regional stakeholders.

 
Tagged:

EconomicReforms

IMFConditions

ElectricitySubsidy

PakistanBudget2025
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