IMF Approves Re1 Electricity Tariff Cut Amid Economic Reforms

Fri Mar 28 2025
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Key points

  • Power plants using natural gas to finance cut
  • Govt is also finalising relief package for electricity consumers
  • IMF acknowledged Pakistan’s efforts to stabilise its economy

ISLAMABAD: The International Monetary Fund (IMF) has approved a reduction of Re1 per unit in electricity tariffs, offering relief to consumers across the country.

This cut will be financed through a levy on captive power plants using natural gas, as part of the government’s plan to manage the energy sector’s finances sustainably, according to The Nation.

Concerning the first review of the ongoing 37-month bailout programme, the development follows the staff-level agreement (SLA) reached between the Washington-based lender and Pakistani authorities.

In addition, the government is finalising a relief package for electricity consumers, although its implementation is still subject to IMF approval.

On Wednesday, Pakistan and the IMF reached a staff-level agreement on the first economic review under the Extended Fund Facility (EFF), securing a $1 billion tranche, pending board approval.

Stabilising economy

A separate $1.3 billion arrangement was also finalised under the Resilience and Sustainability Facility (RSF), bringing the total financing package to $2.3 billion, according to News International.

The reduction in electricity price by Re1 per kilowatt is expected to ease the financial burden on consumers by approximately Rs100 billion in total. An average household consuming 500 units of electricity per month, would see a reduction of Rs500 in their electricity bill under the revised tariff.

In its statement, the IMF acknowledged Pakistan’s efforts to stabilise its economy despite global challenges, highlighting improvements in fiscal discipline, lower inflation, and external balance stability.

However, the Fund cautioned that geopolitical risks, fluctuating commodity prices, and climate-related challenges remain significant threats to economic recovery.

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