The move comes in light of the IMF's demand for structural reforms, which entail raising energy prices, interest rates, and enhancing tax collection to promote job creation and inclusive growth.
ISLAMABAD: (UrduPoint/Pakistan Point News-July 22nd, 2023) The Federal cabinet on Saturday approved a significant increase in the electricity base tariff as part of Pakistan's efforts to meet the strict conditions set by the International Monetary Fund (IMF) under the $3 billion stand-by arrangement.
Prime Minister Shehbaz Sharif reaffirmed his commitment to adhere to the agreement reached with the IMF, demonstrating Pakistan's dedication to meeting the conditions set by the global financial institution.
Previously, the National Electric Power Regulatory Authority (Nepra) had recommended a Rs4.96 increase in the base price, resulting in an additional burden of Rs3,495 on consumers. Following the official process, the government has forwarded the matter to Nepra for the tariff increase, and a public hearing will be conducted by the regulator before the final notification is issued.
Nepra attributed the tariff hike to various factors, including reduced sales, rupee depreciation, inflation, increased interest rates, and expanded capacity.
The move comes in light of the IMF's demand for structural reforms, which entail raising energy prices, interest rates, and enhancing tax collection to promote job creation and inclusive growth.
IMF Managing Director Kristalina Georgieva praised Pakistan's coalition government for its 2023-24 budget, viewing it as a positive step towards fiscal stabilization.
She emphasized the importance of enhancing tax collection to strengthen public finances and create room for increased social and development spending.
Georgieva also urged the government to reduce state expenditure and reform the energy sector, including adjusting tariffs and modifying the subsidy structure.
The IMF supports the State Bank of Pakistan's (SBP) decision to increase interest rates to combat high inflationary pressures, which disproportionately affect vulnerable populations.
Georgieva stressed the necessity of a market-determined exchange rate to absorb external shocks, reduce imbalances, and restore growth and competitiveness.
Furthermore, she called for close oversight of the banking system and decisive action to address undercapitalized financial institutions, ensuring financial stability.
