Govt introduces Rs487bn power subsidy in direct defiance of IMF

Recently released government papers have revealed that the Ministry of Energy has developed a Rs487 billion subsidy plan to help energy users.

Connected to the government’s social protection program, the plan will be available to those who get BISP data.

It has announced the subsidy despite the International Monetary Fund’s harsh demands to cease, as it is a component of a $7 billion bailout package that the government recently received.

In particular, Rs20 billion would be provided to lifeline customers, while Rs380 billion will be provided to protected users who use up to 200 units of power, per the papers.

The Rs160 billion in subsidies would also help households with up to 300 units of consumption.

Nonetheless, the government intends to withdraw Rs23 billion in subsidies intended for users who own 300–700 units.

Households that consume more than 700 units will be subject to the largest reduction. It is going to take out Rs50 billion in subsidies.

The cutoff points represent the delicate balance the government must strike between providing assistance to the most needy sections of the populace and resolving the IMF’s concerns over budgetary restraint.