New power bills proposal sent to IMF

ISLAMABAD:

After the rejection of the first one, the caretaker government has sent a fresh proposal to the International Monetary Fund (IMF) that the additional money allocated for the independent power producers (IPPs) could be adjusted to provide relief to the consumers, who were protesting against the exorbitant rise in their electricity bills.

Finance ministry sources said under the new plan, an amount of over Rs15 billion would be allocated back to IPPs after receiving instalments from the bills.

The sources added that the finance ministry officials would discuss the fresh plan with the IMF again.
In the new plan, the IMF has been assured that no relief outside the budget will be given to the people.

The IMF had rejected an earlier plan sent to it by the caretaker government for providing relief to the power consumers.

The global lender while snubbing the relief plan, said it would have an impact of over Rs15 billion, not Rs5 billion, as Pakistan had suggested in the proposal.

The IMF then sought a proposal on how Pakistan intended to cover the fiscal space of Rs15 billion.
In a related development, caretaker Finance Minister Dr Shamshad Akhtar on Tuesday underscored the interim set-up’s “unwavering” commitment to the successful fulfillment of its obligations under the IMF programme.

She was speaking to World Bank Pakistan Country Director Najy Benhassine, who called on her in Islamabad.

Benhassine was accompanied by his team, which included Lead Country Economist Tobias Akhtar Haque and Operations Manager Gailius J Draugelis.

Dr Shamshad expressed her gratitude to the World Bank for its continuous support and commitment to Pakistan’s economic growth through its ongoing development projects in the country.

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The projects will help Pakistan strengthen its fiscal management, undertake foundational reforms, and uplift the masses.

The caretaker finance minister informed the delegation about the comprehensive measures being taken by the interim government to enhance the country’s revenue collection and pursue sound fiscal policies.

She stressed the need for support to strengthen social safety nets, aimed at providing much-needed relief to the people during challenging economic circumstances.

Benhassine commended Pakistan’s dedication to economic reforms and expressed the World Bank’s readiness to provide technical assistance as well as financial support to help the country achieve its development goals.

The meeting concluded with both sides reaffirming their commitment to strengthen their partnership for the benefit of Pakistan’s economy and its people.

A massive increase in the price of electricity triggered protests across major cities recently, with people burning utility bills, blocking highways and attacking power companies’ offices.

On Tuesday, Azad Jammu and Kashmir (AJK) observed a complete shutter-down strike with thousands of people participating in protest rallies and sit-ins across the region against exorbitantly high electricity bills as well spiralling inflation.

On September 2, thousands of traders observed a shutter-down strike in many places in the country unable to cope with soaring inflation, exorbitant electricity bills and the recent hike in the prices of petroleum products being the cherry on the top.

Decades of mismanagement and instability have hobbled the country’s economy, and this summer Pakistan was forced into a deal with the IMF to avert default.

However, the global lender demanded that popular subsidies cushioning living costs be slashed and revenue targets met for a $3bn loan aimed at reviving the country’s crumbling economy. Petrol and electricity prices skyrocketed after the government caved in to its demands.

(With input from agencies)