Islamabad (Commerce Desk): The International Monetary Fund (IMF) has allowed Pakistan to allocate Rs. 830 billion in subsidies for the power sector in the 2026–27 fiscal year budget. However, it has also imposed a condition to increase electricity prices in January 2027.
According to sources, around Rs. 300 billion of this subsidy will be used to cover losses caused by electricity theft and low bill recoveries. The IMF has made it clear that electricity tariffs will be raised under the annual tariff adjustment next year, factoring in global energy market trends and tensions in the Middle East.
The government has assured the IMF that timely adjustments in electricity tariffs will ensure full cost recovery, while the burden will be distributed in a balanced manner among different consumer groups.
Sources say that the approved subsidy is 16% lower than the government’s request. It includes components such as tariff differential subsidies, dues related to former tribal areas, agricultural tube wells, and payments toward circular debt.
Officials stated that the government remains committed to continuing reforms in the power sector, though reducing circular debt remains a challenge despite previous tariff increases.
On the other hand, the IMF has not permitted subsidies on petrol and diesel, despite rising global prices—something experts are calling a contradiction.
