ISLAMABAD: Punjab’s unexpected power subsidies have become a key obstacle in securing Pakistan’s $7 billion bailout from the International Monetary Fund (IMF). In July, Pakistan reached a Staff-Level Agreement (SLA) for a 37-month, $7bn Extended Fund Facility, but the deal is pending approval from the IMF Executive Board, which has yet to schedule a meeting.
Dr. Abid Suleri, Executive Director of the Sustainable Development Policy Institute (SDPI), emphasized the importance of transparency with the IMF regarding the subsidies. Both the federal and Punjab governments’ subsidies could undermine the conditions agreed upon in July, particularly the IMF’s demand to recover the full cost of electricity from consumers.
Although Pakistan does not appear on the IMF’s calendar until mid-September, sources suggest the country is still on the Fund’s agenda. Delays in addressing the subsidy issue could further complicate Pakistan’s economic situation, despite most other IMF conditions being met.
Story by Mubarak Zeb Khan
