THE suggested revision in the Circular Debt Management Plan, which aims to cap the flow or addition of new debt to the power sector’s existing debt stock of over Rs2.3tr by June 2023, seeks to avoid or at least delay an increase in electricity prices that has been agreed with the IMF for resumption of the Fund’s $6bn programme. The proposed hike of Rs4.50 per unit in the price will raise average power tariffs from Rs16.50 to Rs21. Since the amended Nepra Act has stripped the government of its powers to stop or delay notification passing on price increases to consumers, there is a new strategy in the revised plan to keep electricity rates at their current level, at least for now, to dodge the political fallout of such a massive spike. Yet, it will not be possible for it to entirely avoid the tariff increase in spite of the planned rationalisation of sales tax on electricity sales and the fuel component of generation, as well as enhancement in the amount of consumer subsidy from th
Salman Khan
ISLAMABAD: Pakistan on Tuesday shared with the World Bank a revised outline of the Circular Debt Management Plan that seeks rationalisation of taxes, negotiated takeover of old independent power plants (IPPs) and closure of all old public sector plants to increase electricity tariffs, but slightly lower than that committed with the lenders under the IMF programme.
This was the takeaway of a virtual meeting newly appointed federal Minister for Finance and Revenue Shaukat Tarin-led team of economic ministers and officials had with Managing Director (Operations) of the World Bank Axel van Trotsenburg. Federal Minister for Economic Affairs Omar Ayub Khan, Minister for Power Hammad Azhar, Special Assistant to the Prime Minister on Power Tabish Gauhar, SAPM on Revenue Dr Waqar Masood, the secretaries of finance, power and economic affairs divisions, Federal Board of Revenue chairman and State Bank of Pakistan governor attended the meeting.
World Bank sets tough loan terms
Finance ministry seeks three budget support loans totalling $1.5b before end of June
Alpha Beta Core CEO Khurram Schehzad said the new regulations would improve the rupee-dollar parity. PHOTO: FILE
ISLAMABAD:
The World Bank has set tough conditions for $1.5 billion lending such as increase in electricity rates, introduction of new power and tax policies, putting the government in a tight spot that is already seeking a review of the International Monetary Fund (IMF) deal.
The finance ministry was seeking three budget support loans totalling $1.5 billion from the World Bank before the end of June, sources told The Express Tribune.
Power tariffs need to go up, says IMF
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April 15, 2021
ISLAMABAD: The International Monetary Fund’s (IMF) resident chief in Pakistan, Teresa Daban Sanchez, has said that the government would have to hike electricity tariff to ensure cost recovery of power generation and to grant long overdue autonomy to the State Bank of Pakistan (SBP) in line with the best international practices.
“Pakistan remains committed to the goals of the IMF supported programme and agreed to undertake key reforms of doing away with tax exemptions, elimination of quasi-fiscal circular debt, and SOEs losses,” Sanchez said in a webinar organised by the Sustainable Development Policy Institute (SDPI) here on Wednesday. “Islamabad committed for market-determined and flexible exchange rate, strengthening of social safety nets and strengthening of institutions through Public Finance Management, SBP’s autonomy and bringing reforms into the energy sector,” she added. The IMF chief said that t
ISLAMABAD: Pakistan is all set to achieve some major goals including fiscal sustainability under the Extended Fund Facility (EFF), International Monetary Fund (IMF) Country Representative Teresa Daban Sanchez said on Wednesday.
Speaking at a webinar at the Sustainable Development Policy Institute (SDPI), Ms Sanchez said it is being achieved through the strategy by removing exemptions and privileges, enhancing social and productive spending, coordination with provinces, and elimination of quasi-fiscal circular debt and losses of state-owned enterprises (SOEs).
The IMF representative emphasised that these goals are very important for the future direction of the country and include a market determined and flexible exchange rate as well as an independent central bank with a primary focus on price stability.