LAHORE – Another blow to inflation hit Pakistanis as International Monetary Fund (IMF) imposed new conditions on energy subsidies and provincial budgets.
The development comes after Punjab government decided to offer Rs45 billion in temporary electricity subsidies. The lender requires the end of this subsidy by September 30 and prohibits any new provincial subsidies during the 37-month Extended Fund Facility (EFF) program.
Reports quoting sources claimed such conditions could also affect Punjab’s Rs700 billion solar panel initiative and challenge previous statements by PM Shehbaz Sharif.
US-based lender also mandates that provincial governments cannot undermine their fiscal commitments and must consult with the Finance Ministry before making any changes affecting agreed benchmarks.
IMF program, which still awaits board approval, includes oversight of provincial budgets, and the Finance Ministry is struggling to secure necessary approvals and financing. IMF is also concerned about the federal government’s plan to axe electricity prices, which relies on unrealistic assumptions and has not yet received IMF approval.
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