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February 15, 2026
IMF says Pakistan’s proposed power tariff overhaul must protect middle- and lower-income households as reforms under the $7bn EFF risk raising inflation.
Read more: IMF to Review Pakistan $1.2 billion Loan
The International Monetary Fund (IMF) has said Pakistan’s proposed electricity tariff revisions must not disproportionately burden middle- and lower-income households, as discussions continue under the country’s $7 billion Extended Fund Facility (EFF).
In a statement to Reuters, the IMF said ongoing talks would assess whether the proposed tariff changes align with programme commitments and evaluate their impact on macroeconomic stability, including inflation. The federal government’s proposed overhaul aims to meet IMF conditions ahead of the next programme review.
Analysts warn the changes could increase inflation while easing financial pressure on industry. Electricity carries significant weight in Pakistan’s consumer price index, making tariff adjustments politically sensitive. Estimates suggest the plan could add around 1.1 percentage points to inflation over 12 months, while industrial power prices may fall between 13% and 15%.
The reforms also seek to address long-standing circular debt in the power sector, which has accumulated through unpaid bills and subsidies. Although inflation has slowed to 5.8% from its near-40% peak in 2023, households remain financially strained.
Additional changes to rooftop solar compensation have drawn scrutiny, with concerns that high fixed charges could push consumers away from the grid, raising long-term system stability risks. The debate underscores tensions within Pakistan’s IMF-backed reform agenda.
