Amid ongoing nationwide protests against high electricity bills, the federal cabinet meeting in Pakistan, presided over by caretaker Prime Minister Anwaar-ul-Haq Kakar, failed to announce immediate relief for the inflation-hit population.
The government is now seeking approval from the International Monetary Fund (IMF) before finalizing any proposals.
The proposals under consideration were aimed at providing relief to consumers who consume up to 400 units of electricity per month for the months of August and September. However, the government has decided to consult with the IMF before making any decisions.
Caretaker Information Minister Murtaza Solangi stated that the government would announce its decision after discussing the matter with the IMF.
Solangi explained that while some proposals were discussed and approved during the cabinet meeting, it is imperative to involve the IMF in certain decisions. The caretaker cabinet aims to provide relief to power consumers without negatively impacting the primary surplus and circular debt.
According to the cabinet’s decision, there will be no reduction in power tariffs. Instead, consumers using up to 400 units of electricity per month for August and September will receive relief through adjustments over the next six months. The cabinet expressed concern over the nationwide protests against inflated electricity bills but acknowledged that the government’s hands were tied due to the IMF agreement.
The government has been facing pressure from protesters who have been publicly burning bills and refusing to pay them. The tight fiscal position and the need to maintain the primary deficit and circular debt within agreed limits with the IMF have limited the government’s options.
To address this, the government will need IMF approval to collect the August and September dues from consumers in a phased manner and to pass on the Quarterly Tariff Adjustment (QTAs) over several months. Without the IMF’s approval, these proposals cannot move forward.
The devaluation of the Pakistani rupee against the US dollar and other factors have led to increased capacity payments and higher borrowing costs for local power producers, contributing to the rise in electricity prices. The government’s fiscal constraints and reliance on foreign savings have limited its ability to address these issues without IMF consent.
The approved proposals will now be presented to the IMF for review, and once approved, the government will announce its relief package for power consumers.