KARACHI: The International Monetary Fund said it is in talks with Pakistani authorities over proposed electricity tariff revisions, stressing that any changes must not burden middle- and lower-income households.
In a statement to Reuters, the IMF said ongoing discussions will assess whether the proposed adjustments align with commitments under Pakistan’s economic reform program. The Fund will also evaluate the potential impact on macroeconomic stability, including inflation.
Pakistan recently unveiled a proposed tariff overhaul. Analysts say the move could push up inflation but ease cost pressures on industry. The government aims to meet conditions tied to its $7 billion Extended Fund Facility (EFF) as another program review approaches.
The EFF is a longer-term IMF lending arrangement designed to help countries address structural economic weaknesses and medium-term balance-of-payments challenges.
Electricity prices carry heavy weight in Pakistan’s consumer price index, making tariff revisions politically sensitive. Although inflation has fallen sharply from its nearly 40 percent peak in 2023, it remains a major concern for households and policymakers.
Pakistan’s power sector continues to struggle with circular debt — a buildup of unpaid bills and subsidies across generation companies, distributors and the government. The issue has prompted repeated tariff increases under IMF-backed reforms since 2023.
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The IMF said the accumulation of circular debt has remained within program targets, supported by improved bill recoveries and efforts to reduce system losses.
