Last Updated on: 4th September 2024, 07:12 am
The International Monetary Fund (IMF) has introduced new terms that will close Punjab’s solar panel distribution and electricity subsidy schemes. These decisions are part of the IMF’s efforts to make sure that Pakistan complies with the financial guidelines set under the Extended Credit Facility (EFS) program.
Implications for Punjab About This Decision
The Punjab government had planned to distribute solar panels worth Rs 700 billion to consumers who use up to 500 units of electricity per month. The objective of this scheme was to reduce energy costs in these homes while encouraging the use of renewable energy sources. However, as per the IMF terms, the subsidy must be completed by September 30, and similar subsidies cannot be provided during the 37-month duration of the EFF program.
This development has raised concerns about the future of Punjab’s solar panel scheme. The provincial government hoped the program would have a significant impact on many families by reducing their electricity bills and encouraging the switch to clean energy.
What’s their impact on the financial policies of Pakistan?
The IMF decision is not solely about Punjab’s Solar Program. It also states a broader limitation on provincial governments, which cannot take financial measures that could conflict with Pakistan’s commitments under the IMF’s $7 billion program.
All major financial policy decisions, especially those involving subsidies, now require coordination with the finance department to make sure they meet the IMF’s structural criteria.
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Last Words
The federal government is also feeling the pressure from the IMF’s conditions. The IMF has expressed scepticism about a proposed plan to reduce electricity prices by Rs 6 per unit, which requires an outlay of Rs 2.8 trillion. The plan calls for raising Rs 1.4 trillion from provincial contributions, with the rest to come from commercial loans. However, this strategy has not yet received approval from the IMF, which raises questions about its feasibility.