Dawn reported that a delegation of the finance ministry has persuaded a forward team of the International Monetary Fund to waive for 6 months a condition under which subsidy on electricity was to be removed and tariff enhanced.
An official said that “The cost will be borne by cutting down the Public Sector Development Program by around PKR 50 billion and other budgetary measures.” He added that the estimated amount of the subsidy up to December would be PKR 66 billion.
The official was a member of the Pakistani delegation, led by Mr Shaukat Tarin PM’s Adviser on Finance, which held a week long review meeting with IMF officials in Istanbul. Officials of the World Bank and the Asian Development Bank also took part in the talks.
The government pays 17.5% subsidy on electricity and under an earlier agreement, all subsidies were to end with the start of the current financial year.
The official said that the government had told the IMF that it could not raise the tariff as long as there was load shedding.
Sources in the finance ministry said that a gradual reduction of subsidies would start in the Q1 of the current financial year and the tariff would be raised by 5% in September, followed by 7.5% in January 2010. Ultimately, all subsidies will be removed by the end of March 2010.
Mr Salman Siddiq Finance Secretary said that “The final decision in this regard will be taken at a review meeting with the World Bank, scheduled for July 13 in Islamabad.”
He said that a timeframe for raising power tariff would also figure at the talks. He added that Pakistan and the IMF had agreed on all other Macro Economic Framework Policy goals.
(Sourced from http://www.steelguru.com/news/index/2009/07/15/MTAyMjM1/IMF_allows_respite_on_power_subsidy_condition_in_Pakistan.html)
Tuesday, July 14, 2009
IMF allows respite on power subsidy condition in Pakistan
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