The International Monetary Fund (IMF) has set new rules for Pakistan, focusing on energy subsidies and provincial budgets. These rules come after Punjab decided to give electricity subsidies of Rs45 billion to Rs90 billion over two months.
According to the Express Tribune, government sources said the IMF has placed three main conditions on Punjab due to its decision to offer a Rs14 per unit electricity subsidy. One condition is that this subsidy must end by September 30th.
The IMF has also banned any new subsidies from being introduced by provincial governments during the 37-month Extended Fund Facility (EFF) program.
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These new rules could affect Punjab’s plan to spend Rs700 billion on solar panels for low-power users. The IMF insists that provinces should not start any new electricity or gas subsidies.
Furthermore, the IMF requires that provincial governments avoid actions that could disrupt the commitments made under the $7 billion program. It also requires that provinces consult with the Finance Ministry before making any changes that could affect the agreements with the IMF.
The Finance Ministry is currently struggling to schedule a meeting with the IMF Executive Board to approve the $7 billion loan. This week is crucial for securing new loans and rollovers.
The earlier meeting, planned for August 30th, was postponed because Islamabad failed to arrange a $12 billion loan rollover and secure $2 billion in new financing.
