The International Monetary Fund (IMF) has imposed new conditions on Pakistan concerning energy subsidies and provincial budgets. This follows Punjab’s decision to grant Rs45 to Rs90 billion in electricity subsidies for two months.
According to Express Tribune, citing government sources, IMF has imposed three critical conditions on the Punjab government following its decision to offer a Rs14 per unit electricity subsidy for two months.
Furthermore, it has demanded that this temporary subsidy end by September 30th and has prohibited any new subsidies from provincial governments during the 37-month Extended Fund Facility (EFF) programme.
The IMF’s new conditions could threaten Punjab’s plan to allocate Rs700 billion for solar panels for low-consumption consumers. One condition states that provinces must not introduce any new subsidies for electricity or gas.
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The IMF has also added a condition requiring all provincial governments to avoid any policies or actions that could undermine the commitments made under the $7 billion program. A third critical condition requires provinces to consult with the Finance Ministry before altering or adopting any measures that might impact the structural benchmarks and key actions agreed upon with the IMF.
The Finance Ministry is facing difficulties in scheduling a meeting with the IMF Executive Board to approve the $7 billion loan. This week is crucial for obtaining approvals for new loans and rollovers.
The board’s earlier meeting, set for August 30th, was postponed due to Islamabad’s failure to secure a $12 billion loan rollover and arrange $2 billion in new financing.
