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IMF Sets 11 New Conditions for Pakistan Bailout as India-Pakistan Tensions Raise Risks

The IMF warns that sustained geopolitical tensions could jeopardize Pakistan's reform goals, with new benchmarks tied to fiscal and structural adjustments.

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Overview

  • The IMF has added 11 new conditions to Pakistan's bailout programme, increasing the total benchmarks to 50, with a focus on fiscal, governance, energy, and industrial reforms.
  • The IMF Staff Level Report highlights escalating India-Pakistan tensions, including Operation Sindoor and cross-border strikes, as a significant risk to Pakistan's economic reforms.
  • One key condition requires Pakistan's parliament to approve a Rs 17.6 trillion federal budget by June 2025, aligning with IMF programme targets.
  • India has raised concerns over potential misuse of IMF funds, abstaining from board votes and urging stricter oversight of Pakistan's compliance.
  • The IMF has called for de-escalation between India and Pakistan, emphasizing the need for stability to ensure the success of Pakistan's economic recovery plan.