ISLAMABAD (PEN) : The International Monetary Fund (IMF) has approved a reduction of Re1 per unit in electricity tariffs for Pakistan, providing a much-needed break for consumers across the country. This adjustment comes as part of Pakistan’s ongoing efforts to manage energy sector finances more effectively and to offer financial relief to struggling households and industries.
Funding the Reduction
The tariff reduction will be funded through a levy imposed on captive power plants using natural gas. This levy is part of the government’s broader strategy to maintain financial stability within the energy sector while addressing the rising cost of electricity for consumers.
Ongoing Efforts for Additional Relief
In addition to the tariff reduction, the Pakistani government is working on finalizing a relief package aimed at providing further support to electricity consumers. This package is expected to assist both households and industries facing financial hardship due to high energy costs. However, the implementation of this package is contingent upon approval from the IMF.
Economic Agreement with IMF
On the same day, Pakistan and the IMF reached a staff-level agreement on the first economic review under the Extended Fund Facility (EFF). The agreement secures a $1 billion tranche, which is subject to board approval. Furthermore, a new $1.3 billion arrangement was finalized under the Resilience and Sustainability Facility (RSF), bringing the total financing package to $2.3 billion.
In a statement, the IMF commended Pakistan’s progress in stabilizing its economy, citing improvements in fiscal discipline, declining inflation, and the stabilization of external balances. However, the IMF also highlighted ongoing challenges, including geopolitical risks, volatile commodity prices, and climate-related threats, which continue to pose obstacles to the country’s economic recovery.
The recent developments underscore the IMF’s continued support for Pakistan as it navigates economic challenges while seeking to provide relief to its citizens.
