By Asif Shahzad
ISLAMABAD (Reuters) -Pakistan will cut power prices for domestic and industrial users, Prime Minister Shehbaz Sharif said on Thursday, in a sign of the economy’s recovery from the brink of default.
The International Monetary Fund stepped in to stabilise the Asian country’s finances with a standby arrangement in 2023 and then a $7 billion bailout last year.
Sharif said it was hard work to persuade the IMF to agree to a cut in power tariffs in the midst of the fiscal consolidation required by the bailout.
“I can’t explain what sort of efforts it took,” he told an event in Islamabad, adding that the cuts were only possible because of the power sector reforms that the government had introduced, which he said would continue.
He said Pakistan would also use the money saved from lower global oil prices to pass on to the power sector.
Lower power prices will be a relief to Pakistanis after several increases in the past couple of years.
The tariff will be cut by an average 7.41 rupees ($0.0264) per kilowatt-hour to 34.47 rupees for domestic users, and by an average 7.59 rupees per kilowatt-hour to 40.60 rupees for industrial users, Sharif said.
Pakistan’s $350 billion economy has been struggling since inflation rose to record high of 38.50% in May 2023, with growth turning negative, reserves shrinking to barely a couple of weeks of controlled imports, and interest rates jumping to 22%.
“We have successfully brought the inflation down to single digit,” Sharif said, adding that the nearly 10-percentage-point reduction in the country’s main interest rate in the last year would help businesses grow.
($1 = 280.4000 Pakistani rupees)
(Reporting by Asif Shahzad; writing by Sakshi Dayal. Editing by YP Rajesh and Mark Potter)
