The International Monetary Fund (IMF) has imposed 11 additional conditions on Pakistan under its $7 billion bailout, taking the total to 64 compliance requirements over the next 18 months.
The move underscores growing unease within the Fund about Pakistan’s chronic economic vulnerabilities and uneven reform record.
Pakistan, which has turned to the IMF more than 20 times since the late 1980s, secured fresh disbursements of $1 billion under the Extended Fund Facility (EFF) and $200 million under the Resilience and Sustainability Facility (RSF).
But, the approval came with a waiver request for non-observance of a key performance criterion, highlighting persistent gaps in meeting programme commitments.
The staff-level report released after the Fund’s second review warns of risks stemming from policy slippages, weak institutions, governance failures, and longstanding structural problems.
Despite what the IMF called “strong programme implementation,” it flagged deep concerns over chronic issues in state-owned enterprises (SOEs), the energy sector’s losses and inefficiencies, public service delivery, and overall economic governance.
The Fund said continuous monitoring by Pakistan’s authorities — including the Ministry of Finance and State Bank — is mandatory, and any breach of continuous performance criteria must be immediately reported.
The IMF also drew attention to Pakistan’s heavy public debt, now over $307 billion, with external liabilities forming more than one-third. IMF loans account for a significant part of its multilateral debt.
While Pakistan recorded a primary surplus of 1.3% of GDP in FY25, inflation rose sharply due to flood-driven spikes in food prices, worsening pressure on vulnerable households.
Foreign exchange reserves improved to $14.5 billion at the end of FY25 from $9.4 billion the previous year, though the Fund warned they remain insufficient and must be strengthened further.
The IMF stressed that Pakistan’s recent floods — which “moderately dampen the outlook for FY26” — highlight the urgency of climate-linked reforms. Under the RSF, Pakistan is expected to accelerate resilience-building measures to counter frequent natural disasters.
For India and the wider region, the Fund’s assessment reinforces concerns about Pakistan’s repeated bailout cycles, fragile economic fundamentals, and limited reform progress, all of which have implications for regional stability.
New Delhi has long argued that without deep structural reforms, successive bailouts only provide temporary relief.
Pakistan’s 37-month EFF (approved September 2024) and 28-month RSF (approved May 2025) aim to stabilise the economy and restore confidence. However, the IMF’s latest warnings make it clear that, despite new funds, Pakistan’s economic troubles are far from over, and future disbursements will come with even closer scrutiny.