No relief in electricity prices in future as IMF imposes strict terms

ISLAMABAD: After releasing the first tranche of $1 billion to Pakistan, the strict terms of the International Monetary Fund (IMF) emerged, with significant implications for improving the economy, ARY News reported on Thursday.

Sources within the Ministry of Finance revealed that the National Finance Commission (NFC) award formula will undergo review, while the IMF will monitor provincial government expenditures closely.

The government Reforms aimed at reducing electricity prices and a comprehensive package for the energy sector are also part of the program, while the power purchase agreements within the energy sector will be re-evaluated.

Additionally, the IMF barred the government to provide relief in electricity prices in the future, as seen in the case of the Punjab government.

READ: IMF releases $1 bln loan tranche to Pakistan

Sources further claimed that under the recent terms, the IMF also restrict the inability of the government to set support prices for food grains and a reduction in the federal government structure.

According to the Ministry of Finance, subsidies to the energy sector will be capped at one percent of GDP, and no supplementary grants will be issued during the IMF program.

Tax reforms are another key condition, with plans to bring the agricultural, property, and retail sectors under the tax net.

It is worth mentioning here that the IMF’s Executive Board approved a $7 billion bailout package for Pakistan, the loan program will span 37 months, with the first installment expected by September 30, relieving pressure from external payments.