IMF asks Pakistan to further hike power, gas tariffs

ISLAMABAD: International Monetary Fund (IMF) asked Pakistan to further hike the power and gas tariffs as details of the IMF-Pakistan deal emerged, ARY News reported.

The details of the Pakistan-IMF deal has emerged which stated that Pakistan needs to strict the monetary policy further to decrease the inflation in the country. IMF also welcomed the increase in the interest rate by Pakistan.

The IMF country report stated that the State Bank of Pakistan should be allowed to work independently on the monetary policy and autonomy should be given to SBP.

The inflation rate was 25.9 percent in 2023 whereas it was 12.1 percent. The government also needs to make efforts to increase the income tax.

The unemployment rate which was 6.2 in 2022, may rise to 8.5 percent in 2024 in Pakistan, the report added. The financial loss of Pakistan will remain at 7.5 percent and the debt ratio will be 74.9.

IMF asked Pakistan to gradually decrease the subsidy in the power sector, and expenses related to salaries and pension. The country needs to make reforms regarding pensions.

Furthermore, the IMF warned Pakistan to not take new loans from the State Bank and clear the pending dues of the power sector.

However, IMF welcomed the strengthening of BISP through a targeted expansion of the beneficiary base but called for sustained efforts to ensure enrollment of all deserving families into the CCT schemes.

It is pertinent to mention here that the IMF executive board approved the bailout loan program of $3 billion this week after months of delay, boosting Pakistan’s financial stability ahead of elections this year. Fitch Ratings upgraded Pakistan this week on the improving funding environment.

Later, the State Bank of Pakistan (SBP) received $1.2 billion from the International Monetary Fund (IMF) as the first tranche of a $3 billion bailout to stabilize the economy.

Finance Minister Ishaq Dar – in a televised statement – said the remaining $1.8 would be released after two reviews, meaning that there would be two installments.

Pakistan’s foreign reserves had jumped by $4.2 billion during the last four days, he said – in a reference to a $2bn deposit made by Saudi Arabia and another $1bn received from the United Arab Emirates (UAE).