ISLAMABAD: The International Monetary Fund (IMF) has stated that it is in discussions with Pakistan regarding proposed changes in electricity prices, emphasizing that the burden of these adjustments should not fall on low- and middle-income consumers.

According to Reuters, the IMF said ongoing talks with Pakistani officials will assess whether the proposed tariff adjustments align with program commitments and evaluate their potential impact on macroeconomic stability, including inflation.

Pakistan has announced significant proposed changes to electricity pricing. Analysts believe the revisions could increase inflation but may provide relief to the industrial sector. The government is seeking to meet the conditions of the $7 billion Extended Fund Facility (EFF) program, as another IMF review approaches.

The Extended Fund Facility is a long-term lending program designed to help countries address deep-rooted economic weaknesses and medium-term balance of payments problems.

Electricity holds significant weight in Pakistan’s Consumer Price Index, making tariff revisions particularly sensitive at a time when inflation remains a major political and economic concern. Although inflation has declined substantially from its peak of nearly 40% in 2023, it continues to affect households across the country.

Pakistan’s power sector has long struggled with circular debt — a buildup of unpaid bills and subsidies accumulating between power producers, distributors, and the government. Since 2023, repeated tariff increases have been implemented under IMF-backed reforms to manage these liabilities.

The IMF further noted that improved recoveries and better loss control have helped keep the growth of circular debt within program targets.