IMF allows Pakistan to reduce electricity tariff

The relief will be funded through the revenue generated from a levy imposed on captive power plants using natural gas. The government has introduced this levy as part of its broader strategy to manage energy sector finances efficiently and sustainably.

Additionally, the government is in the process of finalizing a relief package for electricity consumers, aiming to offer further financial support to struggling households and industries. However, the implementation of this package is subject to IMF approval.

On Wednesday, Pakistan and the International Monetary Fund (IMF) reached a staff-level agreement on the first economic review under the Extended Fund Facility (EFF), securing a $1 billion tranche subject to board approval.

Additionally, a new $1.3 billion arrangement was finalized under the Resilience and Sustainability Facility (RSF), bringing the total financing package to $2.3 billion.

In a statement issued on Wednesday, the IMF acknowledged Pakistan’s efforts in stabilizing its economy despite global headwinds over the past 18 months.

The Fund noted improvements in fiscal discipline, declining inflation, and stabilisation of external balances.

However, it cautioned that geopolitical risks, fluctuating commodity prices, and climate-related challenges continue to pose significant threats to economic recovery.