Pakistan’s Bid for IMF Relief on Electricity Bills Faces Hurdles, Potential Impact on Recovery. Sources reported on Monday that Pakistan’s efforts to secure relief in electricity bills from the International Monetary Fund (IMF) have hit a roadblock. According to insiders within the finance ministry, Pakistan and the IMF failed to reach an agreement on this matter. The government’s proposal indicated that granting relief could result in a loss of up to Rs6.5 billion.
However, the IMF rejected this proposal, expressing concerns that it could lead to losses exceeding Rs15 billion. Additionally, the IMF requested Pakistan to present a plan to cover this Rs15 billion financial gap. It is worth noting that the announcement of relief on electricity bills was delayed by the caretaker government pending a revised plan to be shared with the IMF.
Once the new plan is shared, officials from the finance ministry and the IMF will reconvene for further negotiations. The caretaker government assured the IMF that the relief measures would not breach budgetary constraints.
Finance ministry requested the IMF the payment of electricity bills in installments
The finance ministry had initially requested the IMF to allow the payment of electricity bills in installments over four months. Further discussions will take place to finalize this arrangement. On August 31, Caretaker Prime Minister Anwaarul Haq Kakar stated that the government was poised to announce relief on electricity bills within the next 48 hours.
He acknowledged that this issue had persisted due to unfavorable contracts with independent power producers (IPPs) in the 1990s, inefficiencies in bill recovery processes, and inadequate transmission lines. Prime Minister Kakar expressed regret over the fact that for decades, there had been no comprehensive plan to increase hydropower production, leading to increased dependence on imported fuel for electricity generation, thereby inflating electricity costs.
The prime minister emphasized that the government had appointed highly skilled professionals to address pressing challenges, including economic and defense matters. He firmly rejected the notion, circulating on social media, that the masses were being exploited through high electricity bills and taxes.
The steep rise in power bills has sparked nationwide protests, from Karachi to Khyber, with some demonstrations escalating into violence. The protesters are demanding an end to the provision of free electricity to the elites and seeking relief, as their electricity bills often exceed their salaries.