IMF Demands Higher Petrol and Electricity Prices from Pakistan in Exchange for Loan Tranche

Islamabad:The International Monetary Fund (IMF) has once again pressed Pakistan to meet tough conditions for the release of the next loan tranche, demanding increases in both petrol and electricity prices.

The IMF has called for a surcharge of 2.80 rupees per unit on electricity, along with a gradual increase in the petroleum levy from 60 to 70 rupees per liter. Additionally, the IMF has proposed the introduction of a carbon tax for environmental protection.

While the government has opposed new taxes, except for the electricity surcharge, it has acknowledged the IMF’s demands. The next tranche of the loan is contingent on Pakistan’s ability to meet these conditions.

During recent technical-level talks between Pakistan and the IMF, several demands were laid out. The IMF’s conditions also include increasing the petroleum levy to 70 rupees per liter, imposing a carbon tax for climate protection, and imposing a surcharge of 2.80 rupees per unit on electricity to address circular debt.

In a briefing to the IMF, Pakistani authorities mentioned that inflation is expected to remain at 7 percent against the target of 12 percent, and the GDP growth could reach 4.5 percent.

According to finance ministry officials, the IMF has proposed a gradual increase in the petroleum levy by 3 rupees per liter annually over the next three years. Work is also underway on a new five-year energy policy, and policy-level talks, which are set to begin on Monday, will focus on the budget and economic targets for the upcoming fiscal year.