IMF urges Punjab to end electricity subsidy, imposes more conditions

The International Monetary Fund (IMF) has put forward at least three strict conditions in Pakistan after the Punjab province gave Rs45 to Rs90 billion in electricity subsidies for two months.

Last month, President of Pakistan Muslim League-Nawaz Muhammad Nawaz Sharif announced that Punjab government would provide relief of fourteen rupees per unit to consumers using up to 500 units of electricity in August and September bills.

The IMF has asked the province to end the temporary subsidy by September 30th while also clarifying that no province w
could give such a subsidy during the 37-month Extended Fund Facility (EEF) programme.

According to IMF, it was one of the conditions for the bailout that no provinces would take such a move. This brings into question Prime Minister Shehbaz Sharif’s previous statement when he encouraged other provinces to follow suit of Punjab.

Tribune reported that the IMF also introduced the condition that would bind the provinces to not introduce any fiscal policy that could undermine the commitments given under $7 billion loan.

The provinces have committed to signing a National Fiscal Pact by the end of September, which would mean they undertake some expenditures that are currently the federal government’s responsibility.