The International Monetary Fund (IMF) has warned that Pakistan’s plan to privatise Zarai Taraqiati Bank Limited (ZTBL) may threaten credit access for millions of small farmers who depend on the country’s only specialised agricultural lender.
The IMF flagged the concern in its Governance and Corruption Diagnostic report, published on the finance ministry’s website.
The fund noted that depending on its form, ZTBL privatisation could raise issues of access to credit for smallholders, particularly for their development financing.
The warning supports concerns raised earlier by several cabinet ministers and parliamentarians who opposed the sale on similar grounds.
Pakistan’s 7th Agricultural Census 2024 shows that 97% of the country’s farmers own less than 12.5 acres of land. These small landholdings generate little savings. Poor farmers live crop to crop and rely on ZTBL and middlemen for working capital. Conventional banks rarely lend to this segment.
They have also shown little appetite for government-backed schemes, approving barely 10% of applications under the prime minister’s electric bikes programme.
ZTBL’s management has made significant progress in cleaning up the bank’s finances. According to the latest unaudited financial statement for the period ending December 2024, the bank reduced non-performing loans to Rs50 billion.
That marks a 25% reduction in bad loans over three years. In the last year alone, bad loans fell by Rs8 billion, or 14%. Management credits the turnaround to breaking the corruption nexus that plagued the bank before 2022.
The government also revised the Loans for Agriculture, Commercial and Industrial Purposes Act, helping the bank recover Rs9.8 billion over three years.
The IMF had reviewed ZTBL through a governance lens and noted its very high share of non-performing loans due to poor governance.
The fund acknowledged that new management had taken steps to recover problem loans. Cumulative gross profit over the past three years reached Rs70 billion, roughly 280% higher than the combined profit earned in the previous 20 years.
The bank’s tax contributions reached Rs27 billion over the same period. Equity rose to approximately Rs95 billion by September 2024, up from Rs60 billion in December 2022.
Despite this turnaround, the government is pushing ahead with ZTBL privatisation. The Privatisation Commission board recently recommended a transaction structure for the sale to the Cabinet Committee on Privatisation.
Sources say there were divisions within the board over the proposed structure. Prime Minister Shehbaz Sharif held discussions with stakeholders and his kitchen cabinet before the decision. Views remained split. Conventional banks have shown reluctance to fund the prime minister’s housing scheme without sweeping authority to seize homes after a third default notice.
Total credit disbursements by ZTBL reached Rs250 billion over the last three years. This includes Rs42 billion released under the prime minister’s Kissan package. A senior ZTBL management official called the period a historic turnaround. Bad loan recoveries reached record levels while disbursements to farmers also jumped during the period ending December 2025.
The scale of small-farm poverty makes the stakes high. The 2024 census shows 26% of farmers own less than one acre, up sharply from 15% in 2010. About 35% own less than 2.5 acres. Combined, 61% of Pakistan’s farmers hold less than 2.5 acres. Low yields and outdated techniques make these holdings unable to generate decent incomes. At the other end of the scale, only 16,958 landlords own more than 100 acres, holding 6.2% of total farmland.
Critics argue that selling a reformed and profitable bank — one that serves borrowers no private lender will touch — undermines the very farmers the government claims to support. The IMF’s note is a rare public signal that the fund itself shares those concerns.