ISLAMABAD (PEN) : Bloomberg has highlighted that Pakistan is facing the highest inflation rate in the Asian region. The American media outlet pointed out that the Pakistani government was compelled to hike energy prices to secure a new program with the International Monetary Fund (IMF).
Although the inflation rate has eased somewhat, the cost of electricity has outpaced rent prices, leading to widespread protests. The report mentions that, in Pakistan, where nearly half of the population lives on less than $4 a day, electricity prices have surged by 155% since 2021. This increase began when the government raised industrial and retail rates to improve its chances of securing loans from the IMF.
The energy sector, according to Bloomberg, has become a significant challenge amid Pakistan’s ongoing economic crisis. With inflation at about 12%—the highest in Asia—the purchasing power of the populace has dwindled, and electricity consumption has dropped to its lowest in four years as individuals and businesses switch from the largely gas-powered national grid to solar panels.
In July, the average per-unit electricity price for residential users increased by 18% after Pakistan secured a new $7 billion loan from the IMF. This increase led many residents to see their electricity bills, usually a minor part of their expenses, surpass rents that vary from $100 to $700 a month, according to Samiullah Tariq, the head of research at Pakistan Kuwait Investment Co.
As protests by citizens, business groups, and opposition political parties spread across the country, Prime Minister Shehbaz Sharif announced a Rs50 billion ($180 million) subsidy over the next three months to shield the poorest electricity consumers from the brunt of the price hikes.
Bloomberg’s report concludes by noting that Pakistan and the IMF have agreed to restore the energy sector’s viability as part of the bailout program, which includes cost reductions and the privatization of state-owned power distribution companies. Pakistan’s power regulator states that the country loses about 16% of the electricity it generates due to theft and transmission and distribution losses.
