Pakistan faces 11 new IMF reform targets, from ending SEZ tax incentives to changing NAB, energy tariffs, audits, and procurement rules.
- The IMF has set 11 new structural benchmarks for Pakistan under its ongoing programme.
- A major demand is to stop SEZ bodies from granting tax incentives through the next budget.
- The reform list also covers NAB, power and gas tariffs, tax audits, procurement rules, and forex policy.
- Pakistan has also committed to stronger social protection and better business regulation.
- The next budget will be judged not only on numbers but also on whether these reforms are built into law.
Why SEZ Tax Incentives Are Under Pressure
Pakistan’s latest review with the IMF shows that the next federal budget will carry much more than routine tax changes. One of the biggest demands is to end the power of the Board of Investment, the Board of Approval, and Special Economic Zones to grant tax incentives on their own. The Fund believes wide exemptions and selective concessions create distortions and weaken transparency in the economy.
For years, Special Economic Zones and Special Technology Zones were promoted as tools to attract investment. The IMF now wants these regimes to become more rules-based and less dependent on profit-linked tax benefits. Pakistan has agreed to move toward cost-based support and to phase out existing fiscal incentives over time. That makes this a long-term reset of the investment framework, not a small administrative change.
The New IMF Benchmarks Go Far Beyond Taxes
The reform package reaches well beyond SEZ policy. Pakistan has committed to keeping gas and electricity tariffs at cost-recovery levels through regular revisions. In practical terms, that means the government is expected to keep adjusting prices on schedule instead of delaying politically difficult decisions. The goal is to reduce losses and limit the build-up of circular debt in the energy chain.
Governance is another major part of the agenda. The IMF wants changes to the National Accountability Bureau that improve autonomy, transparency, and professional hiring. The broad direction includes merit-based recruitment of senior management and publication of rules and annual case statistics. Alongside this, Pakistan will centralise tax audit selection through risk-based systems and revise procurement rules to reduce preferential treatment for state-owned enterprises.
What The Next Budget Will Need to Prove
The coming FY2026-27 budget will be a major test of Pakistan’s commitment to the IMF programme. The Fund wants parliamentary approval of a budget that delivers an underlying primary surplus of 2 percent of GDP. That reflects continued pressure for fiscal discipline, tighter spending control, and better revenue quality. It also means the government may have less room for broad tax relief unless it finds other ways to offset the cost.
Beyond the headline numbers, the budget will be judged on whether it turns these structural promises into law and policy. That includes reducing the discretion of investment bodies, improving tax enforcement, and moving ahead with legal changes in governance and procurement. In this sense, the IMF programme is no longer only about short-term stabilisation. It is increasingly about rewriting the rules for how Pakistan manages investment, accountability, and public finance.
How Businesses and Households May Feel the Impact
For investors, the IMF roadmap points to a system that may become stricter in the short term but more predictable over time. A legally authoritative Pakistan Regulatory Registry could make it easier to see which business rules apply at the federal level and in Islamabad. Clearer procurement rules and more standardised tax audits may also reduce hidden compliance risks. However, firms that relied on zone-based incentives may face pressure if those benefits are gradually withdrawn.
For households, the effect is mixed. Energy tariff reforms can mean higher utility bills because prices are expected to stay closer to actual costs. At the same time, the programme includes inflation-linked adjustments in Benazir Income Support Programme payments, with quarterly reviews meant to protect vulnerable families. The State Bank’s planned roadmap for gradual foreign exchange liberalisation also shows that Pakistan’s next reform phase will touch taxes, tariffs, regulation, and social support all at once.
This is why the next budget matters so much. It will show whether Pakistan can move from repeated short-term fixes to a more durable reform path. The IMF’s benchmark list is demanding, but it also provides a clear signal about where future policy is heading. For businesses, investors, and ordinary households, understanding these changes early will be critical.
