Pakistan plans subsidy overhaul amid IMF review

Pakistan is planning a major overhaul of its national subsidy framework to transition from broad-based price relief to targeted assistance for low-income households. This reform is a key component of ongoing discussions with the International Monetary Fund (IMF) during a review of the country’s $7 billion Extended Fund Facility (EFF).

A central part of the proposal involves shifting electricity, gas, and fuel subsidies toward the Benazir Income Support Programme (BISP). Under the new mechanism, electricity relief would no longer be applied automatically through consumer tariff slabs. Instead, the government intends to cross-match electricity consumption records with BISP scorecards and the National Socio-Economic Registry to verify eligibility. This process, supported by coordination with the World Bank, aims to ensure support reaches genuinely deserving populations by January 2027.

In addition to subsidy reforms, the IMF mission has discussed Pakistan’s revenue performance, noting that the country exceeded its first-quarter revenue targets despite economic pressures. The discussions also include a commitment to increase BISP cash transfers by approximately 25%. The IMF review is a prerequisite for the potential disbursement of $1.2 billion and the consideration of waivers regarding specific economic performance criteria.