• Finance ministry claims many MEFP actions stem from reforms already initiated, not imposed
• Asset disclosure part of programme since 2024
• PACE empowerment, access to financial intelligence linked to AML/CFT reforms
• Curbs on informal channels lead to 26pc remittance rise in FY25
ISLAMABAD: The Ministry of Finance on Sunday said the so-called “new conditions” in the Memorandum of Economic and Financial Policies (MEFP) released by the International Monetary Fund under the second review of the $7bn Extended Fund Facility (EFF) were, in fact, an “extension and logical progression” of reforms already under way.
“The purpose is to reaffirm that the measures referenced are part of a phased, medium-term reform agenda agreed with the IMF, many of which are extensions or logical progressions of reforms already initiated by the government of Pakistan,” the ministry said in a statement.
The IMF last week released its staff report on Pakistan’s performance under the second review, along with a 21-page MEFP signed by Finance Minister Muhammad Aurangzeb and State Bank of Pakistan Governor Jameel Ahmad.
The IMF staff report, as well as the MEFP, confirmed 11 critical slippages on account of qualitative performance criteria, structural benchmarks and indicative targets for certain areas, numbers and deadlines.
Two more serious and repeated slippages were then converted into ‘prior actions’ — meaning the IMF board approval could not take place until these milestones were achieved, according to both the staff report and MEFP.
Both were accordingly met; for example, the publication of a widely debated governance and corruption assessment. In addition, 11 new qualitative performance criteria, structural benchmarks and indicative targets have been agreed upon for completion before the next biannual review by the end of March or early April 2026 and beyond to take the EFF embedded reforms forward for fulfilment of IMF programme objectives.
The Ministry of Finance said the EFF was designed to support countries in implementing medium-term structural reforms aimed at achieving agreed policy objectives. These reforms are implemented in a sequenced and step-by-step manner over the duration of the programme. Each review builds upon prior actions to ensure that the ultimate policy goals agreed at the outset of the programme are achieved.
Therefore, the ministry said actions under the EFF were “structured as logical steps, with additional measures incorporated at each successive review. The MEFP was finalised following the second review of the EFF supplements, which the MEFP agreed during the first review, and reflects this phased approach”.
It said that during discussions and negotiations with the IMF, the government of Pakistan presented its planned policy reform initiatives. Where the IMF assessed that these initiatives contribute to the agreed programme objectives, they were incorporated into the MEFP.
“As a result, many of the structural benchmarks and actions included in the latest MEFP are derived from reforms already undertaken or initiated by the government of Pakistan, rather than being externally imposed or newly introduced conditions,” it said.
Talking about the “new conditions”, the Ministry of Finance said public disclosure of asset declarations of civil servants had been part of the EFF programme since the initial MEFP in May 2024.
The first deadline under the structural benchmark was missed in February 2025 and then again in June 2026. “The current structural benchmark represents the second step, following the successful legislative amendment to the Civil Servants Act, 1973,” the ministry said.
The ministry also said efforts to strengthen the operational effectiveness and independence of the National Accountability Bureau (NAB), including coordination with provincial anti-corruption establishments, had also been agreed upon earlier. It said the development of action plans for high-risk agencies was a continuation of that commitment and ran parallel to, rather than stemming from, the Governance and Corruption Diagnostic Report.
It added that empowering provincial anti-corruption bodies and enabling access to financial intelligence aligned with Pakistan’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) reform agenda.
The statement said the facilitation and strengthening of foreign remittances inflows was critical to Pakistan’s external stability and measures to curb informal channels helped increase remittances by 26pc year-on-year from FY24 to FY25, with a further increase of 9.3pc projected for FY26.
The authorities worked to remove structural bottlenecks in cross-border payments and the “IMF has built upon these efforts by incorporating them into the MEFP”. Interestingly, MEFP is a Pakistani government document prepared by the IMF and stamped by the finance minister and the SBP governor.
It said the May 2025 IMF staff report recommended a comprehensive study to identify bottlenecks in the local currency bond market to broaden the investor base, which had “now been formalised as a structural benchmark”.
The deregulation of the sugar industry, it said, had originated from the government and “given its alignment with the EFF objective of reducing government intervention in commodity markets”, the IMF has included this initiative as a new structural benchmark.
On revenue reforms, the ministry said the creation of a Tax Policy Office and strengthening compliance risk management had also been part of the programme and were linked to benchmarks with deadlines in 2025.
It said privatisation of power distribution companies had been a core element of the EFF and that the programme now envisaged advancing two more distribution companies under a new benchmark. The ministry added that regulatory reforms through amendments to the Companies Act 2017 for unlisted firms were embedded in the programme from the outset.
It also said a concept note for amendments to the Special Economic Zones (SEZ) Act followed completion of an assessment study that had been set as an earlier benchmark.
The ministry said contingency measures to address potential revenue shortfalls had consistently been part of the MEFP framework since May 2024. It noted that the initial MEFP had included a structural benchmark for introducing a 5pc federal excise duty on fertilisers and pesticides.
Published in Dawn, December 15th, 2025
