To revive the stalled IMF program under the $6 billion Extended Fund Facility (EFF), the government must increase the electricity tariff by Rs.7.14 per unit through adjustments to the base price and fuel price, and a gradual increase in gasoline prices increase costs.
Due to fears of a backlash, the government considers increasing only petrol and further subsidizing diesel. The government is also exploring ways to persuade provinces to contribute to load-sharing to cover fuel costs.
Work is also being done at the highest level of government to design targeted subsidies.
According to official work, the government needs to increase the electricity price by Rs. 4.79 per unit as a base price and another Rs. 2.35 per unit as a pending fuel price adjustment, so the IMF is asking for a total increase of Rs. 7.14 per unit efforts to reduce the further escalation of circular debt.
Pakistan and the IMF are scheduled to hold review talks beginning May 18 to renew efforts to reach a staff-level agreement that could pave the way for the Fund’s Executive Board to approve the release of the next tranche worth to raise $1 billion.
