ACCORDING to media reports, the Government has finally decided to increase electricity tariff as part of the measures aimed at fulfilling conditions of the International Monetary Fund (IMF) for the revival of a $6 billion programme that remains suspended for the last ten months. This could resultantly lead to an increase of 25% in the prices of electricity with serious consequences for the economy.
The Government has its own compulsions in succumbing to the pressure of the IMF as foreign exchange reserves are under pressure due to repayments and the authorities are desperately trying to restore the stalled programme of the IMF to shore up the reserves. The situation became further complicated when the country had to repay the second instalment of $1 billion out of $3 billion that the Kingdom of Saudi Arabia had deposited with the State Bank of Pakistan. Foreign policy initiatives aimed at sorting out misunderstanding with KSA and the UAE could have helped overcome the financial crisis but unfortunately the decision-makers seem to be not in a hurry to do so and as a result axe is about to fall on consumers at a time when they were waiting for fulfilment of the pledges repeatedly made by the top leadership that review of deals with the IPPs would lead to reduction in power tariff. The decision would also frustrate the stated objective of the Government to bring down the cost of doing business and together with substantial upward revision in the prices of POL products and anticipated increase in gas tariff; the increase in electricity tariff would trigger a fresh wave of inflation. Apart from unbearable burden on all consumers, these retrogressive measures would also run contrary to the goal of making our products competitive in the world market and to attract investors in different sectors of the economy.
