ISLAMABAD: Caretaker Prime Minister Anwaar-ul-Haq Kakar maintained on Tuesday it was not entirely correct that the International Monetary Fund (IMF) had dismissed a government proposal for the adjustment of power tariffs in the country, saying it was still possible to provide “targeted subsidies” to disadvantaged socioeconomic classes.
The government decided to approach the IMF recently after widespread protests in Pakistan over inflated electricity bills and rising petroleum prices that have further increased the cost of living in the country.
The protests broke out after the government decided to remove power subsidies and increase electricity tariffs in July to meet a major IMF condition for the approval of a $3 billion short-term bailout facility.
According to some local media outlets, Pakistan had proposed to spread out quarterly tariff and fuel price adjustments over a period of four to six months, but the global lender rejected the plan.
“That is not the correct way of describing the situation,” Kakar told Dawn News TV while responding to a question about the IMF’s decision to turn down the government’s scheme in a brief interview. “The both sides — the fund and the Pakistan government — have explored many avenues and there is an agreement that the class that does not contribute toward tax payments should not be incentivized. We agree with the fund [on that]. We both share the same approach.”
“But the economic class, which is already contributing toward the tax net, we need to look after them, and there is a disadvantaged socioeconomic class, people who have consumed around 200 units [of electricity],” he continued. “That sort of a targeted subsidy to that section is neither being discouraged and nor being curtailed by the fund or the government of Pakistan.”
The prime minister said it was difficult to deal with the problems related with the smooth functioning of the country’s power sector in the short term.
However, he acknowledged deficiencies in electricity generation, distribution and recovery mechanisms while suggesting a holistic approach to address the problem.
The issue of excessively high cost of electricity was also taken up by a Senate standing committee on Tuesday that criticized the power division for inefficiencies, power theft and losses caused to the overall sector.
Pakistan PM says targeted power subsidies still possible for electricity consumers
https://arab.news/w4ew9
Pakistan PM says targeted power subsidies still possible for electricity consumers
- PM Kakar maintains it is not entirely correct the government proposal for tariff adjustment was rejected by the IMF
- Pakistan has witnessed widespread protests over high electricity bills, rising petroleum prices amid spiraling inflation
IMF Executive Board to review $1.2 billion loan disbursement for Pakistan today
- Pakistan, IMF reached a Staff-Level Agreement in October for second review of $7 billion Extended Fund, climate fund program
- Economists view IMF bailout packages as essential for cash-strapped Pakistan grappling with a prolonged macroeconomic crisis
ISLAMABAD: The Executive Board of the International Monetary Fund (IMF) is set to meet in Washington today to review a $1.2 billion loan disbursement for Pakistan, state media reported on Monday.
Pakistan and the IMF reached a Staff-Level Agreement (SLA) in October for the second review of a $7 billion Extended Fund Facility (EFF) and the first review of its $1.4 billion Resilience and Sustainability Facility (RSF).
The agreement between the two sides took place after an IMF mission, led by the international lender’s representative Iva Petrova, held discussions with Pakistani authorities during a Sept. 24–Oct. 8 visit to Karachi, Islamabad and Washington D.C.
“The International Monetary Fund’s (IMF) Executive Board is set to meet in Washington today to review and approve $1.2 billion in loan for Pakistan,” state broadcaster Pakistan TV reported.
Pakistan has been grappling with a prolonged macroeconomic crisis that has drained its financial resources and triggered a balance of payments crisis for the past couple of years. Islamabad, however, has reported some financial gains since 2022, which include recording a surplus in its current account and bringing inflation down considerably.
Economists view the IMF’s bailout packages as crucial for cash-strapped Pakistan, which has relied heavily on financing from bilateral partners such as Saudi Arabia, China and the United Arab Emirates, as well as multilateral lenders including the IMF, World Bank, Asian Development Bank and Islamic Development Bank.
Speaking to Arab News last month, Pakistan’s former finance adviser Khaqan Najeeb said the $1.2 billion disbursement will further stabilize Pakistan’s near-term external position and unlock additional official inflows.
“Continued engagement also reinforces macro stability, as reflected in recent improvements in inflation, the current account, and reserve buffers,” Najeeb said.
Pakistan came close to sovereign default in mid-2023, when foreign exchange reserves fell below three weeks of import cover, inflation surged to a record 38% in May, and the country struggled to secure external financing after delays in its IMF program. Fuel shortages, import restrictions, and a rapidly depreciating rupee added to the pressure, while ratings agencies downgraded Pakistan’s debt and warned of heightened default risk.
The crisis eased only after Pakistan reached a last-minute Stand-By Arrangement with the IMF in June 2023, unlocking emergency support and preventing an immediate default.
