IMF & Pakistan: Electricity Tariff Talks Focus on Protecting Households | Inflation Concerns

February 14, 2026 Priya Shah – Business Editor Business

The International Monetary Fund (IMF) is in discussions with Pakistani authorities regarding proposed revisions to the nation’s electricity tariffs, with a key condition being that any increased burden does not fall on lower- or middle-income households. The IMF communicated this position to Reuters on Saturday.

“The ongoing discussions with the authorities will assess whether the proposed tariff revisions are consistent with these commitments and evaluate their potential impact on macroeconomic stability, including inflation,” the IMF stated.

Pakistan recently announced a plan to overhaul its power tariffs, a move analysts predict will contribute to inflationary pressures while simultaneously providing relief to the country’s industrial sector. The overhaul is intended to satisfy conditions tied to Pakistan’s $7 billion Extended Fund Facility (EFF) program, as the country approaches another review of the agreement.

The EFF is a longer-term loan program designed to address fundamental economic weaknesses and balance-of-payments issues, according to the IMF.

Electricity costs are a significant component of Pakistan’s consumer price index, making tariff adjustments particularly sensitive. While inflation has decreased from a peak of nearly 40% in 2023, it remains a substantial political and economic challenge for the country.

Pakistan’s power sector has been plagued by “circular debt”—a cycle of unpaid bills and subsidies involving generation companies, distributors, and the government—leading to repeated tariff increases under IMF-backed reforms since 2023. The IMF noted that the accumulation of this circular debt has remained within the program’s targets, supported by improvements in recovery rates and loss prevention.

In a separate development, the IMF recently approved a $1.2 billion payout to Pakistan, and a new $1.4 billion program, according to Reuters reports. This follows an earlier release of $1 billion to the country.