Pakistan discards IMF demand for increasing power tariffs

Pakistan expressed its inability to increase the power tariffs as demanded by the International Monetary Fund (IMF) due to its impact on inflation, which has already touched the highest level.

Pakistan discards IMF demand for increasing power tariffsHowever Pakistan assured the IMF to present its alternate plan against the increasing power tariffs.

The IMF delegation met with the officials of Ministry of Energy. The delegation was briefed on the reforms program and performance of the ministry during the meeting,

Prime Minister Imran Khan has already decided not to put further burden on the masses as they are already facing the high inflation rate. Inflation had recorded at 14.6 percent in January 2020 scaling the highest level in 12 years.

The officials informed the IMF delegation that the government is working to introduce a new tariff adjustment mechanism that would keep the average power rates unchanged for up to 18 months.

Officials further said that the Ministry of Energy and IMF delegation agreed to continue dialogues; however, the delegation didn’t react to the proposal of freezing electricity tariff.

The IMF would release the third tranche worth of $450 million if the visiting delegation expresses satisfaction over the economic situation of the country.

Pakistan has so far received $1.44 billion from IMF in two tranches. The IMF in July 2019 had approved a 39-month extended arrangement under the EFF for Pakistan for an amount of about $6 billion.

The government believes that increasing taxes and power tariff would hike the inflation, which had already made the lives of people miserable.

The IMF projected Pakistan’s GDP growth at 2.4 percent and inflation around 11 to 12 percent for the current fiscal year.

Pakistan had also informed the Fund that the government would keep the budget deficit at 7.5 percent of the GDP during the current fiscal year.