Pakistan notifies new procurement rules ahead of IMF talks

The federal government notified the Public Procurement Rules 2026 on Monday, September 29, 2026. The move came two days ahead of a deadline and coincided with the first day of talks with the International Monetary Fund for a $1.2 billion disbursement. The new rules took immediate effect.

IMF team’s schedule and meetings outlined

The IMF delegation, led by Iva Petrova, had been in Pakistan since September 23, 2026. The team spent initial days in Karachi for engagements with the State Bank of Pakistan and other stakeholders. On the first day of formal talks, the IMF team met with officials from the finance ministry, the Federal Board of Revenue, the Establishment Division, and finance secretaries of Khyber Pakhtunkhwa and Punjab. The finance minister was abroad as part of the prime minister's delegation to the UN General Assembly.

Ongoing breach of sovereign wealth fund benchmark

Authorities remain in breach of an end-March 2026 structural benchmark requiring amendments to the Sovereign Wealth Fund Act. The breach relates to adopting governance mechanisms and safeguards for seven state-owned enterprises with a combined asset portfolio of about $8 billion. The amendments are pending parliamentary approval.

The seven SOEs are:

Most of these entities are blue-chip and listed on the stock exchange but remain outside normal reporting requirements. There are ongoing questions over the continuous breach of structural benchmarks regarding the sovereign wealth fund law.

Key features and implications of the new procurement rules

The new rules promote greater transparency and competition in public procurement. They were made under Section 26 of the PPRA Ordinance 2002 and repeal the Public Procurement Rules 2004. The Public Procurement Regulatory Authority stated the rules introduce measures to strengthen oversight throughout the procurement cycle.

Key provisions include making the Electronic Procurement and Disposal System mandatory for federal agencies. The rules establish dedicated procurement cells and independent grievance redressal committees with an appellate mechanism. The grievance system identifies material deviations like deliberate procurement outside the electronic system, tailor-made specifications, and failure to follow prescribed evaluation criteria.

Enforcement is strengthened through blacklisting and cross-debarment. Mechanisms to discourage conflicts of interest include third-party validation and pre-shipment inspection for large procurements. Efficiency measures reduce response times and streamline tender processing for faster contract awards. The rules also emphasise sustainable procurement, encouraging inclusiveness of small businesses and marginalised groups while aligning practices with environmental policy.

However, the rules retain certain exemptions. Rule 32 allows procuring agencies to engage through the electronic system for direct contracting with state-owned enterprises for time-sensitive, scattered, remotely located, public interest, or urgent works and services, including consultancy, provided contracts are not sub-let. The IMF had reservations over this preferential treatment of SOEs for direct contracting.

Authorities may also limit bidding to national bidders or certain categories of them, prohibit participation of bidders of some nationalities, or allow preference to domestic bidders for certain projects. Preference may be given to goods manufactured, mined, extracted, and grown in the country. The rules allow gallop tendering and alternative procurement methods like shopping and negotiated tendering subject to specified conditions.

Procurement cases initiated prior to September 29, 2026, continue under the 2004 framework.