The International Monetary Fund is discussing Pakistan’s proposed electricity tariff revisions, warning that low- and middle-income households must not be burdened. The talks aim to ensure changes support macroeconomic stability and do not worsen inflation, which remains a key concern. The discussions are part of Pakistan’s ongoing compliance with its $7 billion Extended Fund Facility program.
Pakistan recently announced a tariff overhaul expected to ease industrial pressure but risk lifting inflation. Analysts said these revisions are crucial for meeting IMF conditions ahead of the next program review. The EFF is a longer-term loan facility designed to address deep economic weaknesses and balance-of-payments challenges over the medium term.
Read more: IMF weighs Pakistan power tariff changes
Electricity prices carry substantial weight in Pakistan’s Consumer Price Index, making adjustments politically and economically sensitive. Although inflation has fallen from its near-40% peak in 2023, it remains a significant pressure point for policymakers. The IMF emphasized that any tariff changes must be carefully designed to avoid adding financial stress to vulnerable households.
Pakistan’s power sector has long faced circular debt, a buildup of unpaid bills and subsidies across generation companies, distributors, and the government. Repeated tariff increases have been implemented since 2023 under IMF-backed reforms to contain this debt. The fund noted that improved recovery efforts and loss reductions have helped keep debt growth within program targets.
Read more: UAE rolls over $2 billion loan to Pakistan ahead of IMF review
The IMF also highlighted the importance of recovering super tax arrears and ensuring the power sector remains financially sustainable. Officials stressed that tariff revisions must balance economic reforms with protecting households. The government’s next review under the EFF will likely determine how proposed electricity changes proceed.