KARACHI:
The International Monetary Fund is discussing proposals for electricity tariff reviews with Pakistani authorities, the fund said in a statement to Reuters on Saturday, adding that the burden of the reviews should not fall on low- and middle-income households.
“Ongoing discussions with authorities will assess whether the proposed tariff revisions are consistent with these commitments and assess their potential impact on macroeconomic stability, including inflation,” it said in its statement.
Pakistan announced a proposed tariff review, which analysts say would raise inflation while easing pressure on the industry, as it seeks to meet conditions under its $7 billion Expanded Fund Facility (EFF) as another review of the program approaches.
The SAF is a longer-term IMF lending program designed to help countries address deep-seated economic weaknesses and balance of payments problems in the medium term.
Electricity has a significant weight in Pakistan’s consumer price index, making tariff adjustments very sensitive at a time when inflation, although well below its peak near 40% in 2023, remains a key point of political and economic pressure.
Pakistan’s power sector has long been burdened by circular debt (a chain of unpaid bills and subsidies that accumulates between generation companies, distributors and the government), which has led to repeated tariff increases under IMF-backed reforms since 2023.
The accumulation of electricity sector circular debt has been contained within the program objectives, supported by improved performance in recoveries and loss prevention, the Fund added.
