Pakistan increases base power tariff

Amid the economic crisis in the country, Pakistan has increased the electricity base rate by Pakistani Rupees (PKR) 7.5 per unit, ARY News reported on Tuesday. The National Electric Power Regulatory Authority (NEPRA) has approved the federal government's request to hike the base power tariff. After approving the massive hike in the base power tariff, the regulatory authority forwarded the matter to the federal government for the issuance of a notification. NEPRA on July 14 allowed the federal government an increase of PKR 4.96/unit in base electricity tariff, as per ARY News.

The move comes as Prime Minister Shehbaz Sharif had reassured IMF Managing Director Kristalina Georgieva that he would not tolerate an iota of violation of the agreement reached with the global lender. International Monetary Fund (IMF) asked Pakistan to hike the power and gas tariffs further as details of the IMF-Pakistan deal emerged, ARY News reported on Tuesday. The details of the Pakistan-IMF deal stated that Pakistan needs to be strict with the monetary policy further to decrease inflation in the country. IMF also welcomed the increase in the interest rate by Pakistan. IMF asked Pakistan to gradually decrease the subsidy in the power sector, and expenses related to salaries and pension. The country needs to make reforms regarding pensions. Furthermore, the IMF warned Pakistan to not take new loans from the State Bank.

The IMF country report stated that the State Bank of Pakistan should be allowed to work independently on the monetary policy and autonomy should be given to the State Bank of Pakistan (SBP).
The unemployment rate which was 6.2 in 2022, may rise to 8.5 per cent in 2024 in Pakistan, the report added. The financial loss of Pakistan will remain at 7.5 per cent and the debt ratio will be 74.9. However, IMF welcomed the strengthening of the Benazir Income Support Programme (BISP) through a targeted expansion of the beneficiary base but called for sustained efforts to ensure the enrollment of all deserving families into the CCT schemes.

It is pertinent to mention here that the IMF executive board approved the bailout loan program of USD 3 billion early this week after months of delay, boosting Pakistan's financial stability ahead of elections this year. Fitch Ratings upgraded Pakistan this week on the improving funding environment. Later, the State Bank of Pakistan (SBP) received USD 1.2 billion from the International Monetary Fund (IMF) as the first tranche of a USD 3 billion bailout to stabilize the economy.