Interim Finance Minister Dr. Shamshad Akhtar hinted at an upcoming plan by the caretaker government to raise electricity and gas tariffs in January, dashing hopes of relief from high utility costs.
During a press conference held at the Q Block, the federal minister underscored the government’s commitment to reduce costs in the energy sector as part of the International Monetary Fund’s (IMF) Stand-By Arrangement (SBA) and to restore efficiency in these essential services.
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Dr. Akhtar emphasized the pressing need to tackle the mounting circular debt in the power and gas sectors, which has surged past 4% of the Gross Domestic Product (GDP).
Highlighting her discussions with the IMF, Dr. Akhtar outlined potential tariff revisions in the energy sector and the prospect of additional taxes on sectors like real estate and retail. However, she clarified that final decisions on these matters are yet to be made.
She indicated Pakistan’s requirement for a fresh short-term IMF program due to the fragile macroeconomic stability, hinting at a potential medium-term program under the Extended Fund Facility (EFF) after the conclusion of the SBA.
Finance Secretary Imdad Bosal expressed optimism about securing a successful IMF review that could unlock program and project loans from multilateral lenders such as the World Bank, Asian Development Bank, Asian Infrastructure Investment Bank, and Islamic Development Bank. He anticipated a decrease in the current account deficit, thereby reducing the external financing requirement.
Dr. Akhtar anticipated a substantial influx of loans totaling $2 billion from the World Bank in the current fiscal year. Additionally, she highlighted the anticipated increase in foreign exchange reserves following the approval of a $700 million tranche from the IMF, estimating a total disbursement of $1.9 billion out of $3 billion under the SBA.
Addressing the caretaker government’s strategies to stabilize the economy, Dr. Akhtar discussed proactive measures aimed at bolstering market confidence. Initiatives like the $3 billion SBA program and efforts such as the Special Investment Facilitation Council aimed at expediting investments in critical infrastructure were underscored as pivotal in revitalizing the economy.
