Govt will proceed ahead with planned power subsidy reform, IMF told

ISLAMABAD: Pakistan has assured the International Monetary Fund (IMF) to proceed ahead with the planned electricity subsidy reform that will replace the budgeted tariff differential subsidy and cross-subsidy system with a targeted budgeted subsidy framework for low-income consumers via Benazir Income Support Programme (BISP), revealed the IMF’s latest staff report on Pakistan released on Friday.

“We are working closely with the World Bank to link electricity consumers to the NSER (National Socio-Economic Registry) database; we will strive to complete the linking, along with validity checks by end-November 2026, after which we will determine eligibility criteria,” the report quoted Pakistan’s government authorities as having assured the IMF.

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“In parallel, we are launching a communications drive, for which we will hire an external firm by end-May 2026 and are developing a payments mechanism for the subsidy. We notified in December 2025 the Public Procurement Regulatory Authority’s (PPRA’s) adoption of new regulations mandating MEPS-compliant procurement and are now working with the provincial governments to adopt this at the provincial level,” the Pakistani authorities assured the IMF, according to the report.

In this context, the IMF is also assured that Pakistan is also working on a tracking system to measure progress toward MEPS (Minimum Energy Performance Standards) compliance for five select electronic appliances at the product level, which will be in place by end-December 2026.

As per the report, Pakistan has also assured the IMF that its financial year 2027 budget will allow space for an increase in the quarterly Kafaalat benefit from 14,500 rupees to Rs 18,000 (per beneficiary) beginning in January 2027.

This will cover both projected inflation for 2026 and an additional increase in generosity, bringing quarterly benefits significantly closer to our goal of 15 percent of the lowest family income quintile’s consumption basket, mentions the IMF report.

The IMF, in its document, acknowledged that Pakistan met all seven quantitative Performance Criteria (PCs) for end-December 2025 including the targeted cash transfer spending under BISP.

“They successfully implemented an inflation adjustment for the UCT Kafaalat programme in January 2026 — and are on track to fully execute their UCT (unconditional cash transfer) and conditional cash transfer (CCT) budgets for FY26 while expanding Kafaalat and CCT coverage. The FY27 BISP budget will target an increase in UCT generosity beyond an inflation adjustment, from Rs 14,500 to Rs 18,000, moving toward the authorities’ objective of quarterly UCT benefits equivalent to 15 percent of the lowest quintile family consumption,” noted the IMF report.

“In parallel, CCT programme spending should be maintained as a share of GDP (gross domestic product),” the IMF further stated.

Copyright Business Recorder, 2026