Pakistan Approves Power Tariff Hike To Pacify IMF

A deepening economic crisis has all but emptied Pakistan's foreign exchange reserves, leaving it barely enough dollars to cover a month of imports.

In January, annual inflation soared to over 27 per cent -- the highest in Pakistan since 1975. ( Image Source :Getty )

Moving swiftly to meet prior actions of the IMF programme, the Economic Coordination Committee (ECC) of the Pakistan cabinet approved imposition of a special financing surcharge of 3.39 PKR per unit in average power tariff, in addition to quarterly tariff adjustments of up to 3.21 PKR per unit for a year and recovery of pending fuel cost adjustments of up to 4 PKR per unit for about three months.

While the financing surcharge would remain a regular part of average base national tariff, the two other tariff adjustments would sometimes be overlapping simultaneously and fluctuating at other times, reports Dawn news.

In addition, another surcharge at the rate of 1 PKR per unit has been approved in advance for the next fiscal year (FY24), on top of an existing and continuing financing surcharge of 43 paise per unit to cover power sector debt servicing.

Eleventh-hour negotiations between Pakistan and the International Monetary Fund (IMF) on Friday failed to unlock $1.1 billion in crucial funds aimed at preventing the cash-strapped country from going bankrupt.

A deepening economic crisis has all but emptied Pakistan's foreign exchange reserves, leaving it barely enough dollars to cover a month of imports and it is struggling to service sky-high levels of foreign debt, the BBC reported.

The IMF team, which leaves Islamabad on Friday, said "considerable progress" had been made after 10 days of talks.

"Virtual discussions will continue in the coming days," the head of the IMF mission Nathan Porter said in a statement.

In January, annual inflation soared to over 27 per cent -- the highest in Pakistan since 1975 -- and there are mounting fears for the economy in a pivotal election year.

This week, the Pakistani rupee (PKR) sank to a historic low of 275 to the dollar, down from 175 a year ago, making it more expensive for the nation to buy and pay for things, the BBC reported.

The lack of foreign currency is one of the most pressing of Pakistan's problems.

(This story is published as part of the auto-generated syndicate wire feed. No editing has been done in the headline or the body by ABP Live.)