Energy subsidy cuts likely to be Rs375bn in 2024-25
ISLAMABAD (MNP) – With the International Monetary Fund (IMF) sticking to the tough conditions it has been imposing on Pakistan like other developing countries, sources in finance ministry say the energy sector may witness a massive Rs375 billion subsidy cut in the next fiscal year.
It means the electricity and gas tariffs will further be hiked for domestic consumers who are already crushed by a record high and persistent inflation.
At the same time, the unending series of increasing the energy prices have propelled the cost of doing business to a level where the many industrial units are finding it hard to sustain.
The state of affairs are further worsened by the interest rates hikes which has pushed the borrowing costs to 22 per cent.
Although the interest rates haven’t been hiked since June last year, but the State Bank of Pakistan’s policy to avoid rate cuts complicated the things for businessmen who are clamouring for reducing the borrowing costs.
The combination of higher energy tariffs and interest rates is responsible for the current economic as there is no expansion in the existing businesses nor any incentive for establishing new ones.
On the other hand, the planned subsidy cuts will obviously further fuel and sustain inflation, thus resulting in more delay in the vociferously demanded and much-awaited interest rate cuts.
