New York: The International Monetary Fund has confirmed it is in talks with Pakistani authorities over proposed electricity tariff adjustments. The lender stressed that any changes must not burden low- and middle-income households.
According to Reuters, the discussions are reviewing whether the proposed revisions match earlier commitments under the economic program. The IMF is also assessing their potential impact on inflation and overall macroeconomic stability.
Pakistan recently announced plans for major restructuring in power tariffs. Analysts believe the move could raise inflation but may provide some relief to the industrial sector.
The government is seeking to meet the conditions of the $7 billion Extended Fund Facility ahead of the IMF’s upcoming review. The facility is a long-term lending program designed to help countries address structural economic weaknesses and balance-of-payments challenges.
Electricity carries significant weight in Pakistan’s Consumer Price Index. This makes any tariff adjustment highly sensitive, especially as inflation remains a key economic and political concern despite falling from its peak of nearly 40 percent in 2023.
Pakistan’s power sector continues to face mounting circular debt. The issue stems from unpaid bills and subsidies circulating between generation companies, distribution firms, and the government.
Since 2023, IMF-backed reforms have led to repeated tariff hikes to control the debt crisis. The IMF said improved recoveries and better loss management have helped keep circular debt growth within program targets.
