International Monetary Fund (IMF) projected that November 1, 2023, gas tariff raise will add to headline inflation in coming month and asked for a further raise in gas tariff in accordance with the Oil and Gas Regulatory Authority (OGRA) December 2023 determination till February 15, 2024.
The IMF released on Saturday first Review Under the Stand-by Arrangement, Requests for Waivers of Applicability of Performance Criteria, Modification of Performance Criteria, and for Re-phasing of Access-Press Release; Staff Report; and Statement by the Executive Director for Pakistan. “Inflation has generally moderated since June on easing food and energy prices, and headline CPI is now projected to average 24 per cent in fiscal year 24. While the November gas tariff increase will add to headline inflation in coming months, gradual declines are expected given lower core inflation and recent commodity price movements, with year-end inflation revised to 18.5 and 9 per cent in fiscal year 24 and fiscal year 25, respectively,” the report says.The IMF pointed out further efforts include in gas sector: regular (automatic) implementation of semi-annual gas tariff adjustments, including OGRA’s December 2023 determination within the required 40-day window; full phasing out of captive power usage, which reduces demand for electricity generated in the grid, and forces electricity tariffs of grid consumers to cover unused capacity, and exacerbates power sector liquidity pressures; establishing a more level playing field among non-household consumers, including by eliminating cross-subsidies to fertiliser producers and favourable rates for well-connected industries and the formalisation of a circular debt stock reduction plan.
