UPSC CURRENT AFFAIRS – 19th May 2025

Here is a breakdown of the 11 new IMF conditions:

1. Parliamentary Approval of Budget (FY 2026)

• Pakistan must pass a ₹17.6 trillion federal budget in parliament.
• This includes ₹1.07 trillion for development spending.
• The budget must align with IMF programme targets by the end of June 2025.
  
  

2. Increase in Electricity Surcharge

• The government must remove the cap of ₹3.21 per unit on the debt servicing surcharge on electricity bills.
• This means consumers may face higher electricity bills to compensate for inefficiencies in the power sector.
• The legislation for this must be passed by the end of June 2025.
  
  

3. Import Policy Change – Used Cars

• The IMF wants Pakistan to lift the restriction on the import of used cars that are more than three years old.
• The government must allow commercial import of used vehicles up to five years old.
• All relevant legislation must be submitted to Parliament by the end of July 2025.
  
  

4. Agriculture Income Tax by Provinces

• The four provinces must implement new Agriculture Income Tax laws through:
  • An operational platform for processing returns
  • Taxpayer identification and registration systems
  • Public awareness campaign
  • Compliance improvement measures
• Deadline: June 2025.
  
  

5. Governance Action Plan

• The government must publish a governance reform plan based on the IMF’s Governance Diagnostic Assessment.
• The objective is to address weaknesses in public financial management and accountability.
  
  

6. Financial Sector Strategy Post-2027

• A new plan must be developed and published outlining the financial sector framework from 2028 onward, including:
  • Regulatory environment
  • Institutional arrangements
  • Long-term reform goals
    
    

7. Electricity Tariff Rebasing

• Government must issue notifications for annual rebasing of electricity tariffs by July 1, 2025.
• This ensures that energy prices reflect actual costs, discouraging losses in the sector.
  
  

8. Gas Tariff Adjustment

• A semi-annual gas tariff adjustment must be implemented by February 15, 2026 to align tariffs with cost recovery.
  
  

9. Captive Power Levy Legislation

• Parliament must pass legislation to make the captive power levy (currently imposed through ordinance) permanent by the end of May 2025.
• This measure pushes industries to shift from private generation to the national electricity grid.
  
  

10. Removal of Industrial Zone Incentives

• The IMF has required Pakistan to phase out all tax and policy incentives for Special Technology Zones and Industrial Parks by 2035.
• A detailed plan for this must be prepared by the end of 2025.
  
  

11. External Risk Warning – India-Pakistan Tensions

• The IMF report notes that rising tensions with India, especially following Operation Sindoor and missile exchanges, threaten the success of the IMF programme.
• Tensions could derail fiscal targets, external stability, and reform implementation.