Structural reforms inevitable to cope with economic challenges: PM

Prime Minister Shehbaz Sharif on Saturday blamed the spiralling circular debt for increases in electricity rates, saying it was a condition set by the International Monetary Fund (IMF) to strike the crucial $3 billion bailout agreement with the global lender.

The statement came as the government implemented an increase in the average power tariff by Rs4.96 per unit for the financial year 2023-24. This adjustment places an additional burden of Rs3,281 billion on consumers throughout the ongoing financial year.

The tariff hike can be seen as a fulfilment of the government's commitment to the IMF to raise electricity rates. Following this increase, the average national tariff has risen from Rs24.82 per unit to Rs29.78 per unit.

During a conversation with traders and industrialists in Lahore, PM Shehbaz said that there was no other way but to initiate drastic structural and economic reforms, for which unity, sacrifices and struggle from all stakeholders was needed to face the prevailing challenges and steer Pakistan out of economic and other problems.

“The IMF demands an increase in electricity prices but we also have the problem of circular debt. I admit that the burden of taxes is overwhelming,” he added.

Highlighting the efforts made behind the scenes for the crucial IMF deal, the premier said that all stakeholders contributed to saving the country from default.

“China has provided $5 billion in the past three to four months. The US Secretary of State also welcomed the agreement with the IMF. Saving Pakistan from default is a success, but the revival of the programme is not,” he maintained.

Read more: Power tariff jacked up to meet IMF condition

The prime minister said that the economy suffered due to the wrong decisions of the previous government. “National interests were sacrificed for political gains, and our government spent 15 months just rectifying relations with the United States," he said, asking why the previous government did not provide the promised Rs3 billion loans to small and medium-sized enterprises (SMEs).

"We all have to be prepared for sacrifices to take Pakistan towards prosperity,” he added.

Sharing his telephonic conversation with IMF Managing Director Kristalina Georgieva with the business community, the PM said that she expressed her reservations about the mistrust created in the past.

Shehbaz said he assured the IMF MD that the incumbent government would complete its constitutional term on August 14, and after that the interim government would continue honouring the agreement.

He added that unfortunately, Pak-US relations were hit hard by the ill-conceived decisions and remarks by the previous government, but the present coalition government, with collective efforts, had normalised and improved ties with Washington.

“We have to take optimum benefit from the IMF deal by utilising the amount on economic development and people’s prosperity,” he said.

PM Shehbaz further said that providing facilities to industry and commerce was the government's responsibility.

Office-bearers of Lahore Chamber of Commerce and Industry (LCCI) and renowned businessmen and industrialists were present during the meeting at the Governor’s House. Punjab Governor Muhammad Balighur Rehman, LCCI President Kashif Anwar, Senior Vice President Zaffar Mehmood Chaudhry, Vice President Adnan Khalid Butt and a number of former LCCI presidents and business tycoons including Shahzad Ali Malik, Mian Misbahur Rehman, Almas Haider, Muhammad Ali Mian and Mian Anjum Nisar also attended the meeting.