IMF okays Re1/unit power tariff reduction for Pakistan

The International Monetary Fund (IMF) has approved a reduction in electricity tariffs.

According to sources, the IMF has granted permission to lower electricity tariffs by one rupee per unit, providing relief of one rupee per unit to all consumers.

This relief will be funded through revenue generated from the levy imposed on captive power plants, which are subject to a levy on their gas consumption.

The government is also working on a relief package for electricity consumers, which will be announced after obtaining IMF approval.

Meanwhile, under the Staff-Level Agreement (SLA) between Pakistan and the IMF, it has been agreed to introduce a new carbon levy. Alongside the reduction in electricity tariffs, there is also consensus on increasing water prices and opening the automobile sector to global trade.

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The Prime Minister is expected to announce a reduction of up to seven rupees per unit in average electricity rates in the coming days, with implementation likely from April 1, 2025.

However, the implementation of the carbon levy, water price hikes, and other major measures, including the easing of automobile protectionism, is expected from July 1, 2025.

It is noteworthy that a staff-level agreement was reached between Pakistan and the IMF, granting Pakistan access to $1 billion under the Extended Fund Facility (EFF).

In its statement, the IMF noted that inflation in Pakistan is at its lowest level since 2015, with significant improvement in the country’s economic situation and further progress anticipated.