IMF demands an increase in electricity tariffs

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Sources close to the situation revealed on Tuesday that the International Monetary Fund (IMF) has sought an increase in basic power pricing.

Yesterday marked the beginning of talks between Pakistan and the IMF on new loans and budget plans.

In the 2019 fiscal year, the IMF demanded that power prices rise and that circular debt be stopped. It said that circular debt should be contained at Rs2.3 trillion and that subsidies for other sectors and energy prices should be phased out gradually.

In order to reduce circular debt, the IMF also underlined the need for digitising institutions. It stated that tariff differential subsidies of Rs 249 billion should be withdrawn and that by January 2024, one-third of the Rs 976 billion subsidy would have been distributed.

The IMF further said that in addition to terminating Rs 125 billion in extra subsidies and fines, Rs 255 billion of stock and energy production leftovers should also be phased out progressively.

Additionally, the IMF proposed that circular debt might be kept to a maximum of Rs2.3 trillion by eliminating subsidies and that fighting energy theft may help reach this goal.

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