Pakistan has fulfilled many IMF conditions, but energy and privatization still lag behind

During the ongoing negotiations with the IMF, sources have said that Pakistan has fully or partially implemented most of the conditions. Electricity and gas prices were brought closer to cost, the value of the rupee was left largely at the mercy of the market, the State Bank’s autonomy law was implemented and actions against non-filers were also intensified. All these are measures that were included in the IMF’s initial demands.

However, there are some areas where work is still needed. Amendments were made to the agricultural income tax laws but practical implementation could not be achieved. Work is underway on the FBR’s digitalization and Point of Sale system but the number of taxpayers has not increased significantly.

The energy sector remains the biggest headache. There has been no complete success in reducing circular debt, privatization of power distribution companies is slow and a fully targeted subsidy system has not yet been implemented. The privatization of PIA is said to be in the final stages but the burden of other loss-making government institutions has not been reduced either.

Government sources say that the reform process is ongoing and further progress will be made by the next review talks. But the IMF is pressing for the unfinished work to be completed soon because the next tranches of the program are conditional on these reforms.