Pakistan plans to delay raising power tariffs until October, Prime Minister Shahbaz Sharif said on Tuesday, offering respite on power rates, a key component in the country’s agreement with the International Monetary Fund (IMF).
Reining in unresolved debt across Pakistan’s power sector is a top concern of the IMF, with which Islamabad plans to sign a deal this month.
Poor and middle class households are still feeling the impact of the IMF’s bailout of Pakistan last year, which involved a series of power tariff hikes over 12 months as part of the IMF programme which ended in April.
“We are giving this respite for three months: July, August and September,” Sharif told a press conference, with a view to cooling temperatures in October when electricity consumption falls.
Annual power use in Pakistan is expected to fall consecutively for the first time in 16 years, due to higher tariffs curbing household consumption.
Sharif said the decision to delay the raising of power tariffs would benefit 94 per cent of domestic households as the country of 300 million people face summer temperatures surging to a near record.
He added that Pakistan has no choice but to enter a new IMF programme and that Islamabad wants to sign a three-year deal.
Pakistan has set a tax revenue target of 13 trillion rupees ($47 billion) for the fiscal year that began on July 1, a near 40 per cent jump from the previous year.
It aims to lower its fiscal deficit to 5.9 per cent of gross domestic product from 7.4 per cent last year.
While the budget may win approval from the IMF, high taxes on a struggling economy could fuel public anger, according to analysts.