Washington: The International Monetary Fund (IMF) has slapped 11 new conditions on Pakistan for the $7billion lifeline that it has extended and also flagged the rising tensions with India as a huge risk for the cash-strapped country. The new conditions that have been imposed include approval of a new Rs 17.6 lakh crore budget, increasing debt servicing surcharge on electricity bills and lifting restrictions on the import of more than three-year-old used cars, according to a report in Pakistani newspaper Express Tribune.

IMF, Pakistan Economy, India-Pakistan Tensions, Budget Conditions, Defence Spending, Economic Reforms

The Staff Level report, which the IMF released on Saturday, also said that "rising tensions between India and Pakistan, if sustained or deteriorate further, could heighten risks to the fiscal, external and reform goals of the programme". The report further stated that tensions between Pakistan and India have risen significantly over the past two weeks but so far the market reaction has been modest with the stock market retaining most of its recent gains and spreads widening moderately. The IMF has shown Pakistan's defence budget for the next fiscal year at Rs 2.414 lakh crore, which represents an increase of Rs 25,200 crore or 12 per cent. Compared to the IMF's projection, the government has indicated allocating over Rs 2.5 lakh crore, which is an 18 per cent increase after the conflict with India. The IMF has also imposed a new condition of securing parliamentary approval of the fiscal year 2026 budget in line with the IMF staff agreement to meet programme targets by end-June 2025. The IMF has shown the total size of the federal budget at Rs 17.6 trillion, including Rs 1.07 lakh crore for the development spending with an overall deficit of Rs 6.6 lakh crore.