The IMF is disappointed with the government’s failure to communicate the revised gas price

• The IMF instructed the government to review gas tariff prices every two years.
• The PDM government delayed the natural gas hike for political reasons, the IMF said.
• The IMF is also asking Ogra why the gas tariffs were not shared.

ISLAMABAD: The International Monetary Fund (IMF) has expressed its disappointment over the government’s decision not to release the revised gas price every six months – July 1 and January 1 – in a financial year, it said. The news on Wednesday.

The Fund has instructed the government to review gas tariff prices every two years to avoid accumulation of cyclical debt in the gas sector.

“The visiting IMF mission highlighted the issue of non-increase in gas tariff on six-monthly basis by the government,” said a senior official who attended the meeting with the Fund. The news.

“The Fund argued that the failure to raise the gas tariff every two years for the past 10 years since 2013 has caused a huge build-up of gas circular debt.”

Pakistani officials told the Fund that the caretaker government had notified the unprecedented hike in natural gas tariffs from November 1. They also explained that the government hoped to generate 980 billion rupees in revenue in eight months. Therefore, the government may not be required to increase the tariff due from January 2024 when the regulator decides to take effect from January of the following calendar year.

The caretaker government also informed the Fund that the Shehbaz Sharif-led government had delayed the hike in gas tariffs due to political expediency and that the caretaker regime should come up with a massive hike, which will end the process of further hike revolving debt in FY24 which now stands at Rs 2,900 billion.

The IMF mission on Tuesday also held a meeting with Ogra officials and asked the regulator why it has not notified the gas tariffs after 40 days of fixing them. The Fund was informed that the regulator cannot do this on its own as under Section 21 of the Act, it has to seek guidelines from the government.

On Monday, the government informed the IMF that it expects the current account deficit (CAD) to narrow by $2 billion to end at $4.5 billion compared to the $6.5 billion forecast by the end of June 2024.

Report published in The news on Tuesday said the downward CAD forecast indicated that the government expects imports to continue to decline during the remainder of the current fiscal year.

Amid difficulties in realizing foreign dollar inflows up to the desired level, Pakistani authorities have no choice but to devalue the CAD to prevent a balance of payments crisis.

Pakistan’s external financing requirements stood at $28 billion — external debt service of $23.5 billion and CAD provision of $4.5 billion.

Following the signing of the IMF’s $3 billion Stand-by Arrangement (SBA) agreement, foreign exchange reserves improved in July 2023, but in the past two months, the pace of external loans and grants has slowed. Now authorities expect the completion of the first review of the IMF program to spur dollar inflows from multilateral and bilateral creditors.