The federal cabinet has decided to implement a major condition set by the International Monetary Fund (IMF) by increasing the tariff on electricity.
Sources indicate that the federal cabinet has approved an increase in the basic tariff of electricity through a circulation summary. The National Electric Power Regulatory Authority (Nepra) had recommended increasing the basic tariff by an average of Rs5.72 per unit.
Government sources report that this decision will be sent to Nepra for establishing a uniform tariff. Upon Nepra’s approval, the federal government will issue a notification to implement the increase.
As per the IMF conditions, the federal government must increase the basic electricity tariff by July 10. This decision will place an additional burden of approximately Rs600 billion on electricity consumers.
Nepra’s increase in the basic electricity tariff for the financial year 2024-25 will be effective from July 1, 2024, raising the average tariff from Rs29.78 to Rs35.50 per unit.
In the previous financial year ending June 30, the federal government had increased the basic electricity tariff by Rs7.50 per unit, and by Rs7.91 per unit in the financial year 2022-23. The increase for the 2023-24 financial year was implemented in one lump sum, while the increase in 2022-23 was phased over three stages.
Pakistan aims to secure a staff-level agreement on an IMF bailout exceeding $6 billion this month, following the fulfillment of the lender’s requirements in its annual budget. The country has set ambitious revenue targets in its budget to gain IMF approval for the loan, which is crucial to avoiding another economic crisis, despite rising domestic discontent over new taxation measures.
For the fiscal year starting July 1, Pakistan has set a tax revenue target of Rs13 trillion, a nearly 40% increase from the previous year, and aims to reduce its fiscal deficit to 5.9% of GDP from 7.4% the previous year.
