ISLAMABAD: The caretaker government of Prime Minister Anwaar-ul-Haq Kakar is looking for International Monetary Fund’s (IMF) approval before extending any relief to electricity consumers dealing with highly inflated bills, said the information minister, as street protests continued in the country.
People have taken to streets in various Pakistani cities to demand relief from the latest increase in power tariffs amid record inflation in the country. Television footage over the weekend showed people burning the bills and scuffling with officials of power distribution companies.
The protests began in Karachi on August 17 in response to a Rs4.96 per unit power tariff increase by Pakistan’s National Electric Power Regulatory Authority (NEPRA) and have since spread across the country. The price hike was agreed with the IMF earlier this year when the international lender approved a short-term $3 billion bailout package for Pakistan.
The prime minister on Tuesday chaired a federal cabinet meeting to discuss different measures to extend relief to electricity consumers, but the government failed to announce the strategy to assuage public anger.
“Some proposals were discussed during the [cabinet] meeting, but it is imperative to take the International Monetary Fund on board in this regard,” information minister Murtaza Solangi said while speaking to a private news channel.
He said the cabinet deliberated over the recommendations of the energy ministry on the issue related to inflated electricity bills.
“Minister of Finance Shamshad Akhtar was in contact with the IMF and soon the government would be in a position to announce its decisions over the issue related to the bills,” Solangi was quoted as saying in a statement issued by his ministry.
“The decisions would be made after reviewing primary surplus and circular debt data,” he said.
A source in the energy ministry told Arab News that officials were working on a plan to offer electricity consumers of up to 400 units to deposit their bills in four equal instalments.
“Different proposals are being discussed at the moment to extend relief to consumers and hopefully a concrete plan would be announced soon,” he said.
The previous government of ex-PM Shehbaz Sharif agreed with the IMF to raise taxes and power prices for a deal in June that helped the nation avert a sovereign debt default.
On the other hand, All Pakistan Anjuman-e-Tajiran, a body of traders in Pakistan’s commercial capital of Karachi, on Monday threatened to “observe a countrywide shutter down strike on August 31” if the government failed to address the issue of tariff hikes.
The protests over electricity bills are the first challenge for Kakar’s two-week old caretaker administration, which was installed as a constitutional requirement to supervise national elections after the dissolution of the National Assembly earlier in August.
Syed Akhtar Ali, an energy expert, said the government would have to create a fiscal space to extend relief to domestic electricity consumers, otherwise the street protests would “lead to anarchy in the country.”
“The least the government can do at this stage is to withdraw the 17 percent general sales tax on the bills of up to 300 units to provide immediate relief to the public,” he told Arab News.
Ali said the government could compensate the GST burden through budgetary adjustment and cracking down on tax evasion in different sectors.
“In the long run, the government could devise a multiprong strategy to fix the energy crisis by overcoming line losses, theft and phasing out the expensive power plants,” he suggested.
Government looks for IMF nod to extend relief to electricity consumers in Pakistan
https://arab.news/wbw5q
Government looks for IMF nod to extend relief to electricity consumers in Pakistan
- Information Minister says the government is in touch with the IMF to discuss relief measures and would announce them soon
- Energy expert suggests the government to withdraw 17 percent general sales tax to extend immediate relief to consumers
IMF warns against policy slippage amid weak recovery as it clears $1.2 billion for Pakistan
- Pakistan rebuilt reserves, cut its deficit and slowed inflation sharply over the past one year
- Fund says climate shocks, energy debt, stalled reforms threaten stability despite recent gains
ISLAMABAD: Pakistan’s economic recovery remains fragile despite a year of painful stabilization measures that helped pull the country back from the brink of default, the International Monetary Fund (IMF) warned on Thursday, after it approved a fresh $1.2 billion disbursement under its ongoing loan program.
The approval covers the second review of Pakistan’s Extended Fund Facility (EFF) and the first review of its climate-focused Resilience and Sustainability Facility (RSF), bringing total disbursements since last year to about $3.3 billion.
Pakistan entered the IMF program in September 2024 after years of weak revenues, soaring fiscal deficits, import controls, currency depletion and repeated climate shocks left the economy close to external default. A smaller stopgap arrangement earlier that year helped avert immediate default, but the current 37-month program was designed to restore macroeconomic stability through strict monetary tightening, currency adjustments, subsidy rationalization and aggressive revenue measures.
The IMF’s new review shows that Pakistan has delivered significant gains since then. Growth recovered to 3 percent last year after shrinking the year before. Inflation fell from over 23 percent to low single digits before rising again after this year’s floods. The current account posted its first surplus in 14 years, helped by stronger remittances and a sharp reduction in imports. And the government delivered a primary budget surplus of 1.3 percent of GDP, a key program requirement. Foreign exchange reserves, which had dropped dangerously low in 2023, rose from US$9.4 billion to US$14.5 billion by June.
“Pakistan’s reform implementation under the EFF arrangement has helped preserve macroeconomic stability in the face of several recent shocks,” IMF Deputy Managing Director Nigel Clarke said in a statement after the Board meeting.
But he warned that Islamabad must “maintain prudent policies” and accelerate reforms needed for private-sector-led and sustainable growth.
The Fund noted that the 2025 monsoon floods, affecting nearly seven million people, damaging housing, livestock and key crops, and displacing more than four million, have set back the recovery. The IMF now expects GDP growth in FY26 to be slightly lower and forecasts inflation to rise to 8–10 percent in the coming months as food prices adjust.
The review warns Pakistan against relaxing monetary or fiscal discipline prematurely. It urges the State Bank to keep policy “appropriately tight,” allow exchange-rate flexibility and improve communication. Islamabad must also continue raising revenues, broadening the tax base and protecting social spending, the Fund said.
Despite the progress, Pakistan’s structural weaknesses remain severe.
Power-sector circular debt stands at about $5.7 billion, and gas-sector arrears have climbed to $11.3 billion despite tariff adjustments. Reform of state-owned enterprises has slowed, including delays in privatizing loss-making electricity distributors and Pakistan International Airlines. Key governance and anti-corruption reforms have also been pushed back.
The IMF welcomed Pakistan’s expansion of its flagship Benazir Income Support Program, which raises cash transfers for low-income families and expands coverage, saying social protection is essential as climate shocks intensify. But it warned that high public debt, about 72 percent of GDP, thin external buffers and climate exposure leave the country vulnerable if reform momentum weakens.
The Fund said Pakistan’s challenge now is to convert short-term stabilization into sustained recovery after years of economic volatility, with its ability to maintain discipline, rather than the size of external financing alone, determining the durability of its gains.
