ISLAMABAD – The International Monetary Fund (IMF) demanded an increase in the basic electricity tariffs, the sources close to the development said on Tuesday.
The negotiations between Pakistan and the IMF regarding new budget and loan programs started yesterday.
The IMF called for an increase in electricity prices and a halt to circular debt in the upcoming fiscal year, stating that circular debt should be capped at Rs2.3 trillion, and subsidies provided for electricity prices and other sectors should gradually be phased out.
The IMF also emphasized the importance of digitization of institutions to curb circular debt, stating that one-third of the Rs 976 billion subsidy has been disbursed by January 2024, and subsidies amounting to Rs249 billion should be discontinued in tariff differentiation and others.
The IMF further stated that Rs255 billion pertaining to stocks and electricity production residues should also be gradually phased out, along with ending Rs125 billion in additional subsidies and penalties.
It was also suggested by the IMF that by discontinuing subsidies, circular debt could be limited to Rs2.3 trillion, and efforts to combat electricity theft could contribute to achieving the target for circular debt.
