Punjab’s Power Subsidies Impeding IMF Bailout for Pakistan
In the quest for a $7 billion bailout from the International Monetary Fund (IMF), Punjab’s unplanned power subsidies have emerged as a major obstacle. Despite a Staff-Level Agreement being reached in July for a 37-month Extended Fund Facility, the IMF Executive Board meeting is yet to be scheduled.
Dr Abid Suleri, executive director of the Sustainable Development Policy Institute (SDPI), emphasized the importance of the government consulting with the IMF regarding power subsidies at federal and provincial levels. It is crucial to avoid surprises that could hinder approval from the executive board.
Although Pakistan is not currently on the IMF’s calendar until September 18, diplomatic sources indicate that the country is still on the Fund’s agenda. The government’s offer of an energy subsidy post-SLA requires careful negotiation to prevent further delays in the IMF programme.
All IMF targets are being met except for energy subsidies and foreign deposit rollovers. With the Federal Board Revenue showing improvement, Pakistan must navigate these challenges to secure the much-needed bailout.
Published in Dawn, September 10th, 2024