USD7bn EFF programme: IMF seeks 174 legislative amendments

By ISLAMABAD: The International Monetary Fund (IMF) has sought around 174 legislative amendments from Pakistan under the USD 7 billion Extended Fund Facility (EFF) programme, with the government set to place the proposed changes before Parliament as formal review talks begin on Monday. The amendments cover wide-ranging reforms in taxation, energy, privatisation, the Sovereign Wealth Fund, sugar policy, Islamic banking and fiscal consolidation. Briefing the National Assembly Standing Committee on Finance, chaired by Syed Naveed Qamar, Finance Secretary Imdad Ullah Bosal said the government had made it clear to the IMF that approval of legislative amendments was the prerogative of Parliament. READ MORE: Pakistan, IMF kick-off review talks The discussion focused on Programme conditionalities, fiscal consolidation, revenue mobilisation, structural reforms, energy-sector measures, climate commitments, privatisation initiatives and their implications for the economy and the general public. The Committee undertook a detailed review of the ongoing EFF Programme and associated reform commitments, covering implementation of Programme benchmarks, fiscal consolidation, revenue mobilisation, energy-sector reforms, provincial commitments, governance of State-Owned Enterprises (SOEs), climate-related measures, privatisation initiatives and public-sector austerity. 'There are 174 amendments in total which the IMF wants to get passed,' the Finance Secretary said, adding that the government would place all proposed amendments before Parliament. He said the IMF mission was currently in Pakistan and formal review talks would commence from Monday, with the Sovereign Wealth Fund (SWF) also forming part of the discussions. According to Bosal, approval of the governance mechanism for the SWF was among the key benchmarks, including passage of amendments relating to the fund by Parliament. He said the government was also holding discussions with the IMF on remittances, while liberalisation of the sugar policy would be part of the review negotiations. 'Three provinces have agreed on the sugar policy, while one province has some reservations,' the Finance Secretary said. Committee member Javed Hanif Khan remarked that the government knew well which province had raised objections. The Finance Division noted 15 structural benchmarks under the heading fourth review (September-October 2026) including adopting appropriate governance mechanisms and safeguards for the sovereign wealth fund and its SOEs. The Finance Secretary further said a matter relating to Islamic banking was being worked upon, while issues concerning the Tax Policy Office would also come under discussion with the IMF mission. He added that privatisation of power distribution companies (DISCOs) would also be discussed during the review talks. Committee Chairman Naveed Qamar questioned the government's strategy for the DISCOs, particularly the fate of loss-making entities. 'You will give away the profitable DISCOs, but what will happen to the remaining ones?' Qamar asked. The committee emphasised that economic reforms must be underpinned by a coherent, transparent and sustainable economic strategy, particularly where their implementation could impose additional costs on consumers, businesses and productive sectors of the economy. Committee chairman stressed that fiscal consolidation should be accompanied by measures aimed at promoting investment, exports, employment and sustainable economic growth. Members emphasised that assessment of the IMF Programme should not remain confined to formal compliance with prescribed benchmarks, but should also determine whether the reforms were translating into measurable economic and social outcomes. The Committee sought clearer information regarding implementation timelines, outstanding commitments, effectiveness of public expenditure and the implications of various reforms for citizens, businesses and taxpayers. The Secretary, Finance Division, briefed the Committee that the EFF Programme was approved on 25 September 2024, with a total Programme size of USD 7 billion. Cumulative disbursements were reported at approximately USD 4.5 billion, while three Programme reviews had been completed. The Programme was described as supporting balance-of-payments needs and macroeconomic stability, while requiring reforms relating to revenue mobilisation, debt sustainability, fiscal consolidation, taxation, the energy sector, SOE governance and trade liberalisation. The committee was informed that RSF helped to enhance the overall program size to USD 8.4 billion. The Committee was informed that key Programme commitments included parliamentary consideration of supplementary expenditure beyond approved budgets, restrictions on new tax amnesties and preferential tax treatment, energy-sector reforms and implementation of the National Fiscal Pact with the provinces. The Committee also examined primary-surplus targets, government guarantees and the fiscal position of the provinces. Members questioned how provincial surpluses and expenditure priorities were being reconciled with the overall fiscal framework. Officials highlighted commitments relating to human-capital development, social protection and minimum expenditure levels for health and education. The Chair stressed the importance of outcome-based reporting, particularly in the social sectors, and sought information demonstrating what health and education expenditures had actually achieved, rather than merely reporting the quantum of expenditure incurred. The committee was informed that target on education spending was missed. The Committee examined the retailer tax-registration scheme in detail. Members questioned the limited initial participation and sought a measurable assessment of its effectiveness. The Committee called for an assessment covering the number of registrations, revenue generated, compliance outcomes and whether the existing design of the scheme required further adjustment. The Committee emphasised that the Finance Ministry should assess the performance of the scheme over a defined period and hold the implementing authorities accountable against clearly stated objectives. The role of the Federal Board of Revenue (FBR) in implementation was also discussed, and further briefing on the matter was sought. Members sought detailed data regarding industrial captive-power users that had shifted to the national grid and requested clarification regarding the resulting implications for gas and petroleum consumption and circular debt. The Committee emphasised that the implementation of energy-sector reforms should be assessed against their actual operational, financial and economic outcomes. The Committee reviewed the governance framework for State-Owned Enterprises and the reporting relationship between government-owned entities, their respective line ministries and the Finance Division. Officials stated that reporting lines had been clarified and that proposed amendments were aimed at strengthening boards, improving governance and enhancing investment discipline within the Sovereign Wealth Fund framework. The committee was informed that Fund was wanted to end the SWF, however the government wanted to continue with it. Members sought clearer information regarding statutory entities requiring alignment with the SOE Act, as well as the legislative amendments currently under consideration. The Committee received an update on the proposed privatisation of Distribution Companies (DISCOs). Officials reported that three entities were at an advanced stage, with international investor interest and pre-qualified parties participating in the process. Members, however, sought greater transparency regarding the proposed transaction structure, particularly whether the transactions would involve outright privatisation, management transfer or concession arrangements. The Committee also sought clarification regarding the treatment of assets and liabilities and requested a written presentation setting out the proposed terms and conditions before the process proceeds further. Officials informed the Committee that valuations had been undertaken and that potential bidders had been provided access to relevant information. The Committee also examined the restructuring and proposed transaction involving Pakistan International Airlines (PIA). Officials referred to a net asset position of approximately Rs9 billion following restructuring and explained that the Government was considering a transaction involving 75 percent ownership. Members sought a clearer and comprehensive numerical presentation covering valuation, liabilities, transaction proceeds and the position of the remaining government shareholding. The Committee stressed that financial information relating to the transaction should be presented in a professional, transparent and easily comprehensible format to enable Members to properly assess the proposed transaction. The Committee reviewed the Resilience and Sustainability Facility (RSF), including pending reforms and disbursement-linked measures. Members sought clarification regarding the seven reforms reported as unmet and questioned whether delays in implementation could result in additional costs for consumers, including through carbon-related measures. The Finance Secretary briefed the Committee on reforms relating to climate screening of public investment, climate tagging in budgetary documents, disaster-risk financing, climate-related financial-risk management for banks and incentives for the private sector to develop electric-vehicle charging infrastructure. The Committee questioned whether formal completion of a policy benchmark necessarily reflected effective implementation on the ground. Particular attention was given to electric-vehicle charging infrastructure, with Members seeking evidence of actual physical progress and functioning facilities rather than merely administrative completion of the relevant policy measures. The Committee emphasised that any viability-gap funding or other incentives intended to support private investment should be based on measurable implementation, open bidding processes and transparent eligibility criteria. The Committee also reviewed public-sector austerity measures, including a temporary 50 percent reduction in fuel provision for official vehicles, subject to specified operational exemptions, as well as a 5 percent reduction in the non-ERE budget for FY2026–27, estimated at approximately Rs16.1 billion. Members sought evidence of actual savings resulting from these measures and questioned whether the austerity initiatives were yielding substantive fiscal benefits. The broader discussion underscored the need to link fiscal discipline with measurable savings, improved expenditure efficiency and demonstrable fiscal outcomes. The Committee emphasised the need for consolidated and outcome-oriented reporting on outstanding IMF benchmarks, province-wise expenditure outcomes, revenue mobilisation measures, energy-sector reforms, privatisation structures, RSF commitments and austerity savings. The Committee further stressed that future briefings should provide clear implementation timelines, measurable performance indicators and comprehensive written financial information to facilitate effective parliamentary oversight and enable Members to assess not only compliance with programme commitments but also their tangible economic and social impact. The Committee expressed its displeasure over the absence of the Chairman, Securities and Exchange Commission of Pakistan (SECP), as well as the inadequate presentation made by the representatives of the SECP and the Privatisation Commission on the agenda items relating to the CSR Bill, 2026 and PIA Holding Company Limited (PIAHCL). The Committee, therefore, deferred consideration of the said agenda items for discussion in its next meeting. Copyright Business Recorder, 2026