The International Monetary Fund (IMF) is set to review a proposal supported by the Special Investment Facilitation Council (SIFC), aiming to reduce the industrial sector’s subsidy burden by 91 percent, as reported by Express Tribune.
This initiative seeks to enhance the regional competitiveness of Pakistani exporters by potentially lowering their monthly bills by up to 29 percent.
The proposal, which received the nod during the 9th session of the Special Investment Facilitation Council on February 2nd, is poised to bring about transformative changes in the economic landscape.
The plan encompasses multiple facets, including the reduction of commercial debt for PIA amounting to Rs268 billion and the ambitious Rs1.28 trillion energy sector circular debt reduction plan.
The proposed reduction in industrial subsidies has been met with cautious optimism from industry insiders, who anticipate that the cost savings could lead to increased productivity and growth in the industrial sector.
If approved, the subsidy cut is expected to positively impact a range of businesses, from large-scale industrial players to small and medium-sized enterprises (SMEs). However, the proposal is not without its challenges.
While the reduction in cross-subsidy burdens for the industrial sector is a key focal point, there are concerns about potential repercussions on other consumer segments.
The industrial sector, which currently shoulders a significant portion of subsidies, stands to benefit from the proposed cuts, leading to an overall effective industrial tariff ranging from Rs8.5 cents per unit to 11.75 cents per unit, writes the newspaper.
The reduction in variable charges is anticipated to result in a tangible decrease in electricity prices for various industrial segments.
Cottage industries could witness a 28% reduction, while SMEs and power looms might experience a 16% cut. Large-scale industrial operations, including cement and chemical plants, are projected to benefit from a 29% reduction in tariffs.
Despite the potential advantages for the industrial sector, the proposal suggests an increase in fixed charges for residential consumers, ranging from Rs50 to Rs3,000 per month. This shift aims to offset the reduction in subsidies for industrial consumers, leading to a potential increase in monthly bills for residential users.
As the IMF scrutinizes the ambitious plan, stakeholders are keenly awaiting the outcome of the virtual discussions.
The decision, if approved, could mark a significant step forward in reshaping the economic landscape and promoting sustainable growth in Pakistan’s industrial sector.
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IMF is providing us financial assistance. It has every right to dictate his terms for lending us money. We can’t blame IMF for any wrong advice given by IMF. They only lend money and make sure borrower pay back their money.
It is for us to make best possible use of their financing as did by India.
Our politics is in turmoil. To mange the country is politicians jobs. Any army that take part in political affairs losses it’s professional edge.
Those who matter for country must take decisions in the best interest of the country. Pakistan can not be run as it is managed by now.
Stop blaming army in meddling political affairs
Politicians are the facilitators to induce army to dethrone their fellow politicians. Politicians( PMLN, PPP,PTI) must get together in the name of strengthening country and discourage turn coats who frequently change loyalties.
Still the constitution is the supreme. We have seen when politicians don’t want to extend the tenure of army Chief ,they have no option except to retire. It happens only for vested interest politicians extend the tenure of army Chief.