ISLAMABAD: The International Monetary Fund (IMF) is currently in talks with Pakistani authorities over proposed changes to electricity tariffs, stressing that any revisions should avoid placing additional strain on middle- and lower-income households.
In a statement to Reuters, the Fund said the discussions will examine whether the proposed adjustments align with Pakistan’s commitments under its economic reform programme and assess their broader macroeconomic implications, particularly for inflation.
Pakistan recently unveiled plans to restructure electricity tariffs as it works toward meeting the conditions of its $7 billion Extended Fund Facility (EFF) agreement with the IMF. The EFF is aimed at helping countries tackle structural economic weaknesses and address medium-term balance-of-payments challenges. Analysts warn that while the tariff overhaul could provide relief to industry, it may also add to inflationary pressures.
Electricity prices play a significant role in Pakistan’s Consumer Price Index, making any adjustments highly sensitive both politically and economically. Although inflation has eased considerably from its nearly 40 percent peak in 2023, it remains a pressing concern for policymakers and households alike.
The country’s power sector continues to grapple with persistent circular debt — a buildup of unpaid obligations and subsidies circulating among power producers, distribution companies, and the government. Since 2023, tariff hikes introduced under IMF-supported reforms have sought to stabilize the sector.
According to the IMF, stronger bill recoveries and reduced transmission losses have helped keep the growth of circular debt within agreed programme limits.
