IMF approves reduction in electricity tariffs

ISLAMABAD: The International Monetary Fund (IMF) has allowed the Pakistani government to cut electricity tariffs by Rs1 per kilowatt-hour for all consumers.

According to the IMF, the relief will be funded through revenue collected from a levy on captive power plants using natural gas. This reduction is part of a broader relief package aimed at easing the financial burden on electricity users.

Official sources estimate that the move could provide consumers with relief of up to Rs100 billion. Under the new plan, a household consuming 500 units of electricity would save Rs 500 per month.

The IMF stated that this decision is aligned with ongoing energy sector reforms. The development comes shortly after Pakistan and the IMF reached a staff-level agreement, unlocking access to an additional $1 billion under the Extended Fund Facility (EFF).

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The IMF noted that inflation in Pakistan has dropped to its lowest level since 2015, with economic indicators showing signs of improvement.

Pakistani authorities said the IMF’s executive board is expected to approve the second tranche of $1 billion under the EFF and the $1.3 billion Resilience and Sustainability Facility (RSF) by late April or early May.

However, the IMF will initially release only $1 billion, while the remaining $1.3 billion will be disbursed over 28 months, subject to 13 conditions, including the implementation of a carbon levy.