Pakistan economics woes continue as gas prices are likely to rise by 45 per cent amid IMF's demand

Islamabad : Even though Pakistan has been able to secure an International Monetary Fund (IMF) bailout, the road ahead is not going to be easy, as after electricity rates, Islamabad is planning to jack up gas prices as well by over 45 per cent in line with IMF's demand, ARY News reported on Monday citing sources.

The Pakistan federal government has shared a plan with the International Monetary Fund (IMF) for the increase in the gas price. The international lender has asked Pakistan not to delay the rise in the gas tariff to reduce circular debt, ARY news reported.

The IMF wants the federal cabinet to approve the Circular Debt Management Plan 2024 by the end of July as the performance of the institutions cannot be reviewed with the Circular Debt Management Plan 2023, ARY news reported.

The new plan is aimed at paying a whopping circular debt of 392 billion Pakistani Rupees (PKR).

The IMF even wants Pakistan to freeze the power sector circular debt at 2374 billion PKR and devise a 10-year plan to pay the debt of the sector, ARY news reported.

Earlier in June, the federal cabinet authorized a significant increase in the electricity base rate through circulation summary as a move to meet the IMF terms.

The government recommended an increase of PKR 3 per unit for the non-protected residential consumers using 1 to 100 units which will take the current per unit cost from PKR 13.48/unit to 16.48/unit.

Similarly, for the residential consumers using above 700 units, the government proposed a hike of Rs 7.5/unit from the existing PKR 35.22/unit to 42.72/unit.

The federal government has increased the basic power tariff by Rs3 for some customers and by Rs7.5 per unit for some other consumers, ARY news reported citing sources.

Meanwhile, Pakistan's external debt servicing obligations are 2.44 billion USD for the current month of July 2023, including 2.07 billion USD in non-guaranteed debt owed to China, according to The News International.

Another USD 1 billion safe deposit from China is also due, so Islamabad and Beijing are currently working on the rollover of around USD 3 billion bilateral debt within the ongoing month.