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Govt agrees to new IMF targets after missing about a dozen

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• Additional taxes, spending cuts planned to offset revenue shortfalls
• Govt commits to raising federal excise duty on fertilisers, pesticides
• FED to be introduced on sugary items; goods to be shifted to 18pc GST
• Expenditure cuts pledged if National Tariff Policy leads to revenue losses

ISLAMABAD: Having missed a total of 11 performance indicators under its IMF programme, the government has agreed to 11 new targets, including additional tax measures and expenditure cuts from early next month, to make up for rising revenue shortfalls and keep the $7 billion Extended Fund Facility (EFF) on track.

Commitment to the new or revised structural benchmarks, together with completion of two “prior actions”, enabled the conclusion of a staff-level agreement on the second review of the EFF and its approval by the IMF Executive Board for the disbursement of about $1.2bn, reveal fresh documents released by the Fund on Thursday.

The government confirmed at the outset that it estimated a shortfall from the underperformance of the captive power levy of Rs104bn, which it said would be covered by a reduction in power subsidies made possible through lower circular debt accumulation relative to budget estimates.

The Federal Board of Revenue (FBR) has already missed its collection target by about Rs430bn in the first five months of FY26.

“Should FBR’s revenues continue to fall short of expectations in the second quarter of FY26 (end of current month), and if other tax revenues are insufficient to bridge the gap, we will — in consultation with IMF staff — increase federal excise duty (FED) on fertilisers and pesticides by five percentage points, introduce FED on high-value sugary items, and move items from the 8th GST schedule to the general GST regime,” Finance Minister Muhammad Aurangzeb assured the Fund, implying full 18pc GST on those items.

He further committed that “if by the end of the second quarter of FY26 there is a revenue shortfall due to the implementation of the National Tariff Policy, we will postpone an equivalent amount of expenditure until the last quarter of FY26”.

Pakistan has also sought waivers for already missed targets in terms of performance criteria, str­u­ctural benchmarks and indicators. The documents confirm that publication of a governance and corruption assessment report was set as a “prior action” for the latest $1.2bn disbursement to the State Bank of Pakistan, while an­­other prior action related to recapitalisation measures for a weak bank.

In all, the authorities missed one out of six qualitative performance criteria, five structural benchmarks and four indicative targets — some of which were subsequently met after the original deadlines or extended.

The waivers pertain to non-ob­servance of the end-June quantitative performance criterion (QPC) on Benazir Income Support Prog­r­amme (BISP) spending, and a mo­­dification of three end-December QPCs: the ceiling on the general government primary budget deficit, the floor on the number of new tax returns (to account for seasonality) in line with the agreed FY26 primary surplus, and the BISP floor on targeted cash transfers.

Under the roadmap agreed with the Fund, the FBR will complete all actions required to fully implement at least three priority areas by the end of March 2026, including any necessary subordinate legislation, staff hiring and allocation, and initial KPI reporting.

The government has also committed to publish an initial study by the end of June 2026 assessing the fiscal costs and effectiveness of incentives for all existing Special Economic Zones (SEZs) and Export Processing Zones (EPZs), and to phase out all such incentives by 2035.

A Tax Policy Office has been created and will now handle all tax policy functions, including the development and publication of a medium-term tax reform strategy by the end of December 2026. The new strategy is intended to reduce reliance on ad hoc revenue measures and ensure revenue-neutral reforms that deliver sustained growth in tax receipts over the medium term.

Provinces have pledged to realise the full potential of agriculture income tax by fully operationalising information-sharing between the FBR and provincial tax auth­o­rities, and by ensuring that all services — except for a limited list of exemptions — are subject to GST.

The authorities will also conduct a comprehensive study of bottlenecks in the local currency bond market and publish an action plan to address identified weaknesses by the end of September 2026. They have further undertak­­en to strengthen efforts to make formal channels more attractive than the hawala market, without resorting to fiscal incentives. To this end, the SBP plans to conduct a comprehensive assessment of remittance costs by the end of May 2026 to improve cross-border payments.

At the same time, the authorities will seek to deepen the foreign exchange market, including through greater reliance on interbank trading and exchange rate flexibility, to support external sustainability.

On the power sector, the government has promised to complete the bidding process for the first round of privatisation of three distribution companies (Dis­c­­os) early in 2026 and to move ahead with the rest.

It has committed to completing the preconditions for the privatisation of Hyderabad Electric Supply Company (Hesco) and Sukkur Electric Power Company (Sepco) by the end of December 2026. The authorities also plan to advance the privatisation of public generation companies, finalise transmission network restructuring and launch a wholesale electricity market.

Following amendments to the asset declaration framework, pre­p­­arations are underway to publish, by the end of December 2026, the asset declarations of high-lev­­el federal civil servants on a government website. The framework will also extend to high-level provincial officials and allow banks full access to their declarations.

Based on an institutional-level risk assessment, the National Accountability Bureau (NAB) will lead and coordinate action plans to mitigate vulnerabilities in the 10 agencies identified as having the highest risks by the end of October 2026.

Amendments to most of the nine statutory state-owned enterprise (SOE) laws are expected to be submitted to the National Asse­mbly before the end of August 2026. In parallel, the government is moving to amend the Sovereign Wealth Fund (SWF) law by the end of March 2026 to clarify its mandate, ensure transparent and competitive divestment and procurement procedures, introduce fiscal safeguards, and subject SWF-owned SOEs to the SOE law. Operationalisation of the SWF will remain on hold until these amendments are adopted.

Published in Dawn, December 12th, 2025



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Centre asks provinces to ‘fully implement’ interim wheat policy

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• Food minister says provinces must maintain strategic wheat reserves in line with population
• Senate panel informed strict monitoring prevented crop failures
• Lawmakers concerned over research gap, point out lack of efforts to boost donkey farming

ISLAMABAD: The federal government has asked provincial governments to fully implement the interim national wheat policy 2025-26 within their respective jurisdictions to safeguard the rights of wheat farmers and flour consumers.

The advice came at the conclusion of the first meeting of the National Wheat Oversight Committee formed under the interim wheat policy, chaired by Minister for National Food Security and Research Rana Tanveer Hussain, in Islamabad on Monday.

At the same time, the minister emphasised that all provincial governments must maintain strategic wheat reserves in accordance with their population requirements to ensure food security. It may be noted that the interim policy remains under wraps, but a few weeks ago, the government shared a new roadmap for wheat procurement.

In September this year, the federal government unveiled the ‘National Wheat Policy and Wheat Management Strategy’ for 2025-26 to serve as a long-term plan to ensure food security, safeguard farmers’ livelihoods, protect consumers and build resilience against market disruptions and climate-induced emergencies. At the time, the food minister had said the wheat policy would be finalised and adopted after comprehensive consultations with all stakeholders.

Food minister says provinces must maintain strategic wheat reserves in line with population

During the meeting on Monday, Mr Tanveer highlighted the strategic importance of wheat in meeting the country’s food requirements and emphasised the need for increasing wheat cultivation to ensure national food security. Detailed deliberations were held on the procurement mechanism for the upcoming wheat crop in line with the policy’s objectives.

He also stressed the importance of including the private sector in the wheat value chain to create new business opportunities and generate employment, particularly for the youth. The meeting was attended by provincial and regional secretaries of food and agriculture, along with senior officials from relevant departments.

Senators briefed on crop monitoring

Separately, the Senate Standing Committee on National Food Security and Research was informed on Monday that due to strict monitoring mechanisms, Pakistan did not face any major wheat or rice crop failure caused by diseases, such as yellow rust.

The committee reviewed the latest research undertaken by scientists at the Pakistan Agricultural Research Council and the National Agricultural Research Centre regarding newly evolved seed varieties and assessed the progress of the Green Pakistan Initiative (GPI), with particular emphasis on the livestock sector.

About 1,500 wheat lines and 500 rice lines are regularly monitored under the Crop Diseases Research Institute (CDRI) to prevent the spread of crop diseases under the mechanism developed by the Pakistan Agricultural Research Council and the National Agricultural Research Centre. The standing committee was briefed about these initiatives during its visit to the National Agriculture Research Centre (NARC).

At the research centre, the committee members were apprised of the functioning of various scientific laboratories and research institutions. A comprehensive briefing was given on the functions, mandate, and working of PARC and NARC.

The committee visited the NARC and received briefings on the functioning of various scientific laboratories and research institutions. Duri­­ng the visit to the Land Resource Resea­rch Institute, the committee was briefed on bio-fertilisers and training initiatives being undertaken by NARC to enable farmers to produce bio-fertilisers independently.

The committee appreciated the wheat and pulses speed breeding facilities but expressed concern over the widening research gap due to climate change. Committee Chairman Senator Syed Masroor Ahsan direc­ted PARC to focus on promoting sm­­art agricultural practices and developing climate-resilient seed varieties.

Emphasising the promotion of smart agriculture, fisheries development, and bridging the gap between research and farmers, the committee chairman directed the authorities to intensify efforts towards national development and economic strengthening through agricultural and livestock research and development. Mr Ahsan further stressed that each and every media source should be used to create awareness among the farmers so that they may benefit from the latest research.

The committee highlighted that although agriculture was a devolved subject after the 18th Amendment, effective coordination between the federation and provinces in the agriculture and livestock sectors was essential.

The committee also received a comprehensive briefing on the GPI, particularly focusing on the livestock sector. Members were briefed on initiatives, including animal tagging and the establishment of model animal markets. It was informed that Pakistan was the “third-largest milk producer” in the world.The committee raised questions regarding donkey farming initiatives for meat and skin exports and pointed out the lack of organised efforts to develop this sector.

Published in Dawn, December 16th, 2025



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Businesses panic as transporters’ strike ‘cripples’ supply chains

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KARACHI: Businessmen fear economic activity in the port city and the province will come to a standstill and local production will shut down due to a nine-day-old cargo transporters’ strike, which has disrupted the movement of goods across the province.

Representatives of multiple bu­­­siness bodies urged the Sindh government to intervene and address the situation stemming from the stri­­ke, which has a crippling impact on industrial production and supply chains.

In a letter to the Sindh chief minister, Overseas Investors Chambers of Commerce Industry (OICCI) Secretary General Abdul Aleem said the situation was a very serious concern for the industry and commerce in the country.

He said he had raised this matter on Dec 12 with the Punjab and Sindh chief secretaries, but it partially eased the situation in Punjab only. However, the situation in Sindh and Karachi port, inward and outward movement of goods, has remained unchanged, he added.

“Many of our members have reported that trucks from Punjab are still unable to enter Karachi and port operations have also been severely constrained, and several major manufacturing facilities are now at imminent risk of shutdown,” he informed the Sindh CM.

Sindh CM urged to intervene to address issue as cargo unions announce nationwide boycott on 19th

“One OICCI member reported production lines shutdown this morning, with some others anticipating closures between tomorrow (Tuesday) and Wednesday,” he said, adding that “OICCI members further report that essential raw materials and finished goods are stranded across highways”.

According to Pakistan Vanas­pati Manufacturers Association (PVMA) Chairman Sheikh Umer Rehan, the supply of edible oil, ghee and essential daily-use commodities has been affected, while the transportation of industrial raw materials has come to a halt.

Mr Rehan warned the suspension of raw material supplies could paralyse the production process, leading to severe repercussions for the economy. He said the delivery of imported goods had come to a complete standstill, resulting in consignments being stuck at ports and exposing businesses to substantial financial losses in the form of demurrage and detention charges.

Pakistan Association of Large Steel Producers General Secre­tary Wajid Bukhari said the goods transporters’ strike had a crippling impact on industrial production and supply chains. Prolonged disruption could result in layoffs, wage losses for workers, and long-term damage to Pakistan’s industrial credibility, he feared.

He urged the federal and provincial governments to engage in talks with the transporters, review the Motor Vehicle Ordinance 2025, and ado­pt a balanced approach that ens­ured road safety without paralysing the industry and production.

The current wave of protests by transporters began in response to the enforcement of the Motor Vehicle Ordinance 2025 on Dec 8, under which traffic auth­orities imposed increased fines, strict penalties, vehicle impoundment, and FIRs against drivers and transport operators. Trans­po­­rt unions argue that the ordinance has been implemented without adequate consultation and has made routine transport operations financially unviable.

While negotiations temporarily eased tensions in some areas of Punjab on Dec 13, major transport bodies, including the All Pakistan Transport Federation and allied goods transport associations, have now announced a nationwide wheel-jam strike on Dec 19 after expressing dissatisfaction with government assurances.

Transport leaders have warned that unless controversial clauses of the ordinance are withdrawn or substantially revised, goods and passenger transport across the country will remain suspended.

Published in Dawn, December 16th, 2025



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Diesel price slashed by Rs14 as petrol remains unchanged

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The government on Monday decreased the high-speed diesel (HSD) price by Rs14 and kept the petrol price unchanged for the fortnight ending December 31, owing to favourable international market prices.

In a late-night announcement, the Petroleum Division said the revision followed movements in international markets and recommendations from the Oil and Gas Regulatory Authority (Ogra).

According to the announcement, the ex-depot price of HSD has been reduced by Rs14 per litre (5pc) to Rs265.65 per litre for the current fortnight from Rs279.65 per litre. Most of the transport sector runs on HSD.

Its price is considered inflationary as it is mostly used in heavy transport vehicles, trains and agricultural engines like trucks, buses, tractors, tube-wells, threshers, and particularly adds to the prices of vegetables and other eatables.

Transporters had already increased their fares based on an approximate Rs27 per litre increase between May and August, and have not reversed them despite a Rs9 per litre cut.

The ex-depot petrol price was kept unchanged at Rs263.45 per litre. Petrol is primarily used in private transport, small vehicles, rickshaws, and two-wheelers, and directly impacts the budgets of the middle and lower-middle classes.

Although general sales tax (GST) is zero on all the petroleum products, the government is charging Rs78 per litre on diesel and Rs82 per litre on petrol and high octane products on account of petrol levy and an Rs2.50 per litre climate support levy (CSL).

The government is also charging about Rs16-17 per litre custom duty on petrol and HSD, irrespective of their local production or imports. In addition, about Rs17 per litre distribution and sale margins are going to oil companies and their dealers.

Petrol and HSD are the major revenue spinners with their monthly average sales of about 700,000 – 800,000 tonnes per month compared to just 10,000 tonnes of monthly demand for kerosene. The government recovered about Rs1.161 trillion through the petroleum levy alone in FY2025 and expects this to jump by about 27pc to Rs1.470 trillion during the current fiscal year.



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