The Government of Pakistan Government of Pakistan has assured the International Monetary Fund that electricity and gas prices will continue to be adjusted regularly in line with global energy costs under ongoing economic reforms linked to the IMF programme.
The commitment was shared during budget negotiations with the International Monetary Fund (IMF), where Pakistani officials briefed the Fund on energy sector reforms, circular debt management, and fiscal targets for the next phase of the bailout programme.
According to officials, electricity and gas tariffs will continue to increase for all consumers except protected categories. The government also pledged to maintain quarterly electricity tariff adjustments and monthly fuel cost adjustments without delays.
Authorities informed the IMF that Pakistan would continue implementing a full cost recovery model, under which changes in global oil and energy prices are directly passed on to domestic consumers through petrol, electricity, and gas pricing.
The government has set an electricity subsidy ceiling of Rs. 830 billion for FY2027, equivalent to around 0.6 percent of GDP. The subsidies will cover support for power distribution companies, K-Electric, agricultural tube wells, FATA-related arrears, and circular debt obligations.
Pakistan further assured the IMF that the planned increase in the basic electricity tariff from January 2027 would be fully implemented under the reform framework.
Officials also shared updates regarding negotiations with Independent Power Producers (IPPs), stating that agreements on arrears and penalty-related disputes are expected to be finalized by June 2026.
In the gas sector, authorities informed the IMF that audited circular debt data have been compiled and that quarterly public disclosure of gas circular debt figures will now be introduced, similar to the power sector.
The government has additionally committed to limiting the annual increase in circular debt to Rs. 300 billion during FY2027.
Officials also briefed the IMF on plans to privatize major electricity distribution companies, including IESCO, GEPCO, and Faisalabad Electric Supply Company, by early 2027.
