On Sunday, the International Monetary Fund (IMF) reportedly pressured Pakistan to implement an increase in gas tariffs, as per sources. The requested hike, extending potentially up to 41 percent, is expected to be enforced by mid-February. Sources indicate that the IMF has taken a firm stance, refusing to extend subsidies on the power tariff, except for those explicitly outlined in the national budget.
Further details from insiders reveal a financial allocation plan, with a substantial Rs 1000 billion earmarked for the petroleum sector. Rs 250 billion has been designated for the power sector, Rs 600 billion for OGDCL (Oil and Gas Development Company Limited), and another Rs 150 billion for the PPL (Pakistan Petroleum Limited).
Simultaneously, Pakistan has presented an electricity tariff proposal to the IMF, specifically tailored for the export sector. This proposal advocates for a reduction in power tariffs from the current 14 cents to 9 cents, aiming to enhance the competitiveness of the export sector. The plan is contingent upon receiving approval from the international lender. Notably, a previous attempt to lower power tariffs for the export sector faced rejection from the IMF.
The export sector in Pakistan has been persistent in its demand for reduced power tariffs, viewing it as a crucial element in boosting the country’s overall export competitiveness. The ongoing negotiations and discussions between Pakistan and the IMF underscore the country’s complex economic challenges, with the IMF playing a significant role in prescribing financial and economic reforms.
In the broader economic context, the IMF has revised Pakistan’s growth estimate for the fiscal year 2024 to two percent in its World Economic Outlook (WEO). This adjustment represents a 0.5 percent reduction from the projections outlined in the October outlook.
These developments collectively highlight the intricacies and ongoing negotiations within the economic landscape of Pakistan as it seeks to address fiscal challenges and implement necessary reforms.
