Amid the negotiations with International Monetary Fund (IMF) for resuming $6billion financing facility, Finance Minister Shaukat Tarin has said that the government will raise electricity prices “gradually” and added that there is an urgent need to improve the country’s energy efficiency.
He made the remarks at the session of the US Institute for Peace on the topic “Pakistan’s Economic Future.”
Energy tariffs are a key part of the IMF’s negotiations with Pakistan. The goal is to successfully resume the facility that will pave the way for $ 1 billion in revenue.
News reports have previously suggested that Pakistan reached an agreement with the IMF, where a summary is prepared for the federal cabinet to approve a price increase of Rs. 1.39 per unit effective from November 1, 2021.
Tarin said that “Pakistan’s GDP and per capita income are growing. When the IMF talks about raising tariffs, we believe that if you do it without structural changes, it will only increase inflation and make our industry uncompetitive. But we also understand their point of view. So we only had some technical discussions with them, and we are going to gradually increase these tariffs in such a way as not to rapidly increase inflation. “
Pakistan is witnessing an increased inflation in recent months, and international commodity prices will almost certainly put additional pressure on it. The central bank has already raised its key interest rate by 25 basis points, while additional hike is on the cards.
The finance minister predicts GDP to grow by 5% this fiscal year, hence Pakistan’s energy sector will become even more important in terms of efficiency and reliability.
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