(Web Desk) – The International Monetary Fund (IMF) has said Pakistan’s power sector arrears remain within agreed targets under the country’s $7 billion Extended Fund Facility (EFF), indicating progress in ongoing economic reforms. However, the Fund emphasized that any proposed electricity tariff increases must safeguard middle- and lower-income households from disproportionate financial pressure.
In its latest assessment, the IMF noted that efforts to improve bill recoveries and reduce losses in the electricity sector are producing positive results. Measures aimed at strengthening financial discipline and addressing inefficiencies have helped maintain power sector arrears within program benchmarks.
The reforms form part of Pakistan’s broader economic stabilization strategy under the EFF programme, which focuses on improving fiscal sustainability and addressing long-standing structural challenges. According to the Fund, ongoing initiatives include the privatization of electricity distribution companies, restructuring of generating companies, and modernization of the transmission system. These steps aim to enhance operational efficiency, reduce circular debt, and stabilize the country’s energy sector over the long term.
Despite acknowledging the need for tariff adjustments as part of sector reforms, the IMF stressed that social protection must remain a key priority. The Fund warned against policies that could place an excessive burden on vulnerable households, noting that energy pricing reforms should balance economic sustainability with social equity.
IMF officials confirmed that staff-level discussions are continuing with Pakistani authorities regarding proposed electricity tariff revisions. These talks will form part of the end-March review of the EFF programme, where policymakers will evaluate whether tariff changes align with macroeconomic objectives, including inflation control and financial stability.
Analysts say the IMF’s position highlights the challenge facing Pakistan as it seeks to implement necessary energy reforms while minimizing the impact on consumers already coping with rising living costs. The outcome of upcoming negotiations could significantly influence Pakistan’s economic outlook and energy pricing policies in the months ahead.
