ISLAMABAD: The Economic Coordination Committee of the Cabinet approved the power tariff hike by withdrawing subsidies for the export-oriented sector and the Kissan package.
Federal Minister for Finance Senator Muhammad Ishaq Dar chaired the meeting of the ECC. The meeting discussed the revenue and fiscal measures to be taken to fulfill the demands of the IMF before signing the staff-level agreement.
The ECC reviewed the quarterly tariff adjustments, fuel price adjustments, and imposition of one rupee/unit surcharge on big power consumers.
The meeting also approved a revised circular debt management plan. With this plan, the tariff would be increased by Rs7-8 per unit till August 2023.
Also, the base tariff will be increased from Rs15.28/unit in June 2022 to Rs23.39 till June 2023.
The government, however, has protected power users of 300 units from an upcoming hike in tariff.
As per IMF demand, the additional subsidy was slashed from Rs675 billion to Rs335 billion.
Meanwhile, the government has received the Memorandum of Economic and Financial Policies (MEFP) from the International Monetary Fund (IMF) regarding the conclusion of the ninth review of a $7 billion loan program.
Finance Minister Dar said that the government and Fund representatives would attend a virtual discussion on this subject on Monday.
“We insisted that they (the Fund delegation) give us the MEFP before departing so we could look at it over the weekend,” he said.
Earlier, the IMF Mission Chief Nathan Porter delivered a concluding statement stating that virtual conversations will continue between the two sides in the following days.
These conversations will be done to finalize the implementation of key targets. The finance minister revealed these specifications during a press conference in Islamabad.
Talks between the government and the IMF took place from January 31 to February 9. There was significant uncertainty regarding the results of the discussions. Moreover, whether a MEFP draft had been shared as the visiting party departed without making a concluding statement.
Dar said there was no confusion during his press appearance today. He said that the government and Fund representatives would attend a virtual discussion on this subject on Monday. “We insisted that the Fund delegation should give us the MEFP before departing. So that we could look at it over the weekend,” he said.
He continued, “I am confirming that we received the MEFP draft at 9 am today. Over the weekend, we will thoroughly review the (MEFP) draft. Furthermore, we will have a virtual meeting with the Fund officials. It will undoubtedly require several days.
The MEFP is a crucial document that outlines all of the requirements and procedures. Moreover, it outlines policy directives upon which the two parties proclaim the staff-level agreement.
The two parties discussed the proposed policy measures after sharing the draft MEFP. After the discussions, a staff-level agreement is signed and sent to the Executive Board of the Fund.
The finance minister said that IMF has demanded improvements in a few areas which was in Pakistan’s interests.
The government would get $1.2 billion from the IMF after signing of the deal, according to the finance minister.
Dar outlined the policy steps that the government and the IMF had agreed upon, stating that taxes totaling Rs170bn would be implemented. We shall make an effort to avoid enacting any taxes that directly affect the average person.