Islamabad, Sep 3: Pakistan is now subject to additional requirements from the International Monetary Fund (IMF) following Punjab’s decision to provide a two-month electricity subsidy of Rs. 14 per unit.
According to Express Tribune, the lender has stipulated that the subsidy must terminate by September 30 and has further forbidden any province government from implementing such subsidies during the 37-month Extended Fund Facility (EFF) program.
The Punjabi government’s plan to give away solar panels valued at Rs. 700 billion to customers who use up to 500 units per month is in jeopardy because of these circumstances. Provincial governments are also required by the IMF’s new requirements to abstain from enacting any policies that would jeopardize agreements made under the new $7 billion program. This essentially prevents provinces from making independent budgetary decisions without first contacting the Finance Division, especially when those decisions may have an impact on established structural benchmarks.
The outrageously high revenue estimates of Punjab and Sindh have also drawn criticism from the IMF for their financial management, as they may make it more difficult for the federal government to generate the necessary Rs. 1.24 trillion cash surpluses.
The financing agency is likewise dubious about the federal government’s proposal to invest Rs. 2.8 trillion to lower energy rates by Rs. 6 per unit. Without IMF clearance, the plan is predicated on audacious assumptions that the provinces will collect Rs. 1.4 trillion and commercial lenders will cover the remaining amount.
