IMF Blocks Pakistan's Attempt to Slash Electricity Tariffs Amid Economic Review

The International Monetary Fund (IMF) has halted Pakistan's plan to reduce electricity tariffs due to a stalled staff-level agreement on the USD 7 billion Extended Fund Facility. This decision follows a recent rejection of Pakistan's plea for tax exemptions on foreign investments, highlighting IMF's strict fiscal policies.

The International Monetary Fund has effectively stalled Pakistan's attempts to reduce electricity tariffs following a delay in the staff-level agreement related to a USD 7 billion Extended Fund Facility, as reported by Dawn. The development coincides with the IMF rejecting Pakistan's earlier request for tax exemptions on foreign investments.

Dawn reported that Prime Minister Shehbaz Sharif was expected to announce an Rs8 per unit reduction in electricity rates on March 23. However, no such announcement was made during his Pakistan Day address. Instead, Sharif convened a meeting attended by key ministers and officials to review the power sector issues.

The PM Office had previously stated plans to maintain petroleum prices, transferring the financial benefit to electricity consumers. Although a tariff cut package was proposed, it required IMF approval, which is currently reviewing Pakistan's economic performance. Proposals to increase the petroleum levy on oil products to fund the tariff cut were discussed, though they await IMF's sign-off.

(With inputs from agencies.)