ISLAMABAD: The International Monetary Fund (IMF) has imposed stringent conditions on Pakistan following Punjab’s decision to offer a significant electricity subsidy, which the IMF deemed “fiscally reckless.” The provincial government had introduced a subsidy ranging from Rs45 billion to Rs90 billion, providing Rs14 per unit relief for two months to consumers using 201 to 500 units.
Government sources revealed that the IMF has mandated the withdrawal of this temporary subsidy by September 30th and prohibited any further provincial subsidies during the ongoing 37-month Extended Fund Facility (EEF) program. This directive jeopardizes Punjab’s ambitious plan to allocate Rs700 billion for distributing solar panels to consumers with monthly usage of up to 500 units.
The IMF’s new conditions also restrict provincial governments from adopting policies that might undermine commitments made under the $7 billion program. Additionally, the provinces are now required to consult with the Finance Ministry before implementing any measures that could impact structural benchmarks agreed with the IMF.
These restrictions come as the federal government faces challenges in securing IMF approval for its $7 billion program, with concerns over provincial revenue estimates and the Federal Board of Revenue’s (FBR) recent shortfall in meeting its revenue target.
Story by Shahbaz Rana
