Home News Pakistan approves major electricity tariff hike to meet IMF request

Pakistan approves major electricity tariff hike to meet IMF request

Pakistan approves major electricity tariff hike to meet IMF request


Latest World News: Pakistan approves major electricity tariff hike to meet IMF request

As Pakistan moves forward to meet IMF conditions, the federal cabinet has authorized a significant increase in the base electricity tariff through a traffic summary in a late-night decision, sources quoted by ARY News on Saturday said.

Pakistani Prime Minister Shehbaz Sharif (via REUTERS)

Sources familiar with the development told ARY News that the Federal Government has increased the basic electricity tariff by Rs3 for some customers and Rs7.5 per unit for some other consumers.

The cabinet approved an increase in electricity tariffs on the recommendation of the National Electricity Regulatory Authority (Nepra).

Under the proposal, the government has recommended an increase of PKR 3 per unit for unprotected residential consumers using 1 to 100 units, which will bring the current unit cost from PKR 13.48/unit to 16.48/unit.

Similarly, for residential consumers using more than 700 units, the government has proposed an increase of 7.5/unit from the existing PKR of 35.22/unit to 42.72/unit.

Sources say the government has referred the case to Nepra to raise the tariff and the regulator will hold a public hearing to decide the matter before issuing a final notification.

If approved, the new tariff will come into effect on July 1.

On July 14, Nepra authorized the federal government to increase the basic electricity tariff by PKR 4.96/unit.

The move comes as Prime Minister Shehbaz Sharif reassured IMF Managing Director Kristalina Georgieva that he would not tolerate an iota of violation of the agreement with the global lender.

The International Monetary Fund (IMF) has asked Pakistan to raise electricity and gas tariffs further as details of the IMF-Pakistan deal emerge, ARY News reported on Tuesday.

The details of the Pakistan-IMF deal stated that Pakistan should be strict with monetary policy in order to further reduce inflation in the country. The IMF also welcomed Pakistan’s interest rate hike.

The IMF has asked Pakistan to gradually reduce subsidies in the electricity sector, as well as spending on salaries and pensions. The country needs to make pension reforms.

In addition, the IMF has warned Pakistan not to take new loans from the State Bank and pay pending electricity sector dues.

The IMF country report said the State Bank of Pakistan should be allowed to work independently on monetary policy and autonomy should be given to the State Bank of Pakistan (SBP).

The unemployment rate, which was 6.2% in 2022, could reach 8.5% in 2024 in Pakistan, the report adds. Pakistan’s financial loss will remain at 7.5% and the debt ratio will be at 74.9.

However, the IMF welcomed the strengthening of the Benazir Income Support Program (BISP) through a targeted expansion of the beneficiary base, but called for sustained efforts to ensure the enrollment of all deserving families in CCT programs.

It is relevant to mention here that the IMF board approved the $3 billion bailout loan program this week after months of delay, bolstering Pakistan’s financial stability ahead of this year’s elections. Fitch Ratings upgraded Pakistan this week on improving funding environment.

Later, the State Bank of Pakistan (SBP) received $1.2 billion from the International Monetary Fund (IMF) as the first tranche of a $3 billion rescue package to stabilize the economy.

Finance Minister Ishaq Dar said in a televised statement that the remaining US$1.8 would be released after two reviews, meaning there would be two installments.

Pakistan’s foreign exchange reserves jumped by $4.2 billion in the past four days, he said, referring to a $2 billion deposit made by Saudi Arabia and another $1 billion received from the United Arab Emirates (UAE).


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