IMF: Electricity Tariff Burden Should Not Fall on Middle, Lower-Income Households

Islamabad — The International Monetary Fund (IMF) has stated that ongoing discussions with Pakistani authorities on proposed electricity tariff revisions must ensure the burden does not fall on middle- or lower-income households, while remaining consistent with macroeconomic stability and programme commitments.

In a statement to Reuters on February 14, 2026, the IMF emphasised that tariff adjustments — part of efforts to meet conditions under Pakistan’s $7 billion Extended Fund Facility (EFF) — should be evaluated for their impact on inflation and overall economic stability.

Key Highlights

• IMF stresses tariff revisions must spare middle/lower-income households.
• Discussions assess consistency with EFF commitments and inflation impact.
• Pakistan’s power sector circular debt contained within programme targets.
• Improved recoveries and loss prevention supported debt control.
• Electricity tariffs carry heavy weight in consumer price index.
• Adjustments aim to ease pressure on industry while addressing subsidies.

The IMF noted that Pakistan’s power sector has long been burdened by circular debt — a chain of unpaid bills and subsidies across generation companies, distributors, and the government — prompting repeated tariff increases under IMF-backed reforms since 2023.

The Fund highlighted that accumulation of circular debt has remained within programme targets, aided by better performance in bill recoveries and loss prevention measures.

Electricity carries significant weight in Pakistan’s consumer price index, making tariff changes highly sensitive amid ongoing inflation pressures — though rates have declined sharply from the near-40 per cent peak in 2023.

The proposed overhaul, analysts say, seeks to reduce subsidies and ease industrial pressure while aligning with EFF requirements ahead of the next programme review.

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The IMF reaffirmed that any revisions must protect vulnerable segments, underscoring the need for balanced reforms that safeguard macroeconomic stability without exacerbating hardship for ordinary citizens.

Pakistan continues to engage with the IMF to ensure compliance with EFF targets, with a focus on sustainable energy sector reforms and equitable burden-sharing to support long-term economic recovery and public welfare. Further details on the tariff discussions are expected as talks progress.

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