In Islamabad, it appears that there will be no relief for the public from the high costs of electricity and gas rates, as interim Finance Minister Dr. Shamshad Akhtar announced that the caretaker government intends to raise the prices of these utilities in January to address the circular debt issue, as reported by The News on Friday.

During a press conference at Q Block on Thursday, the federal minister explained that, as part of the International Monetary Fund’s (IMF) Stand-By Arrangement (SBA), the government has committed to reducing costs in the energy sector and restoring efficiency.

“The accumulated debt within the power and gas industries has surpassed 4% of the Gross Domestic Product. Immediate action is required to bring it down. We have initiated measures in this regard, and electricity and gas rates have been adjusted accordingly,” she stated.

Discussions with IMF about electricity and gas rates.

Providing further details about discussions with the IMF, the finance minister mentioned informing the global lender about tariff revisions in the energy sector and the intention to impose additional taxes on various sectors, including real estate and retailers. However, she clarified that no final decision has been made yet.

Dr. Akhtar emphasized the need for a new short-term IMF program for Pakistan’s fragile macroeconomic stability, stating that the country might have to pursue another medium-term program, likely under the Extended Fund Facility (EFF), once the SBA concludes.

Regarding the external financing gap, Finance Secretary Imdad Bosal expressed optimism that a successful IMF review would unlock loans from multilateral lenders such as the World Bank, Asian Development Bank, Asian Infrastructure Investment Bank, and Islamic Development Bank. He anticipated a reduction in the current account deficit, scaling down the external financing requirement.

Bosal added that there is no external financing gap, as program loans from the World Bank and Asian Development Bank, as well as co-financing from the Asian Infrastructure Investment Bank, were in advanced stages of processing and expected to be approved in December.

The finance minister anticipated that Pakistan’s ratings would improve after the review, leading to increased dollar inflows through foreign loans. She mentioned that the World Bank is expected to disburse $2 billion in loans during the current fiscal year, with foreign exchange reserves building up after the approval of a $700 million tranche from the IMF.

Dr. Akhtar highlighted the caretaker government’s efforts to stabilize the economy and build market confidence, particularly through the $3 billion SBA program and proactive measures. Speaking at The Future Summit in Karachi, she mentioned the establishment of a transaction pipeline under the Special Investment Facilitation Council to accelerate investments in critical infrastructure projects, including the $10 billion Saudi Aramco Refinery. The finance minister also emphasized the focus on addressing the structural weaknesses of state-owned enterprises (SOEs) through the activation of the Centralized Monitoring Unit and the finalization of a SOE policy to improve governance and financial efficiency.

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