Pakistan assures IMF of replacing 200-unit power subsidy with BISP-linked system

Pakistan has assured the International Monetary Fund (IMF) that it will replace the existing electricity subsidy system for consumers using up to 200 units with a targeted subsidy mechanism linked to Benazir Income Support Programme (BISP) data from January 2027, The News reported. 

The new framework would replace the current tariff differential subsidy and cross-subsidy structure with a targeted budgeted subsidy system for low-income electricity consumers.

The government plans to use data from the National Socio-Economic Registry (NSER) in coordination with the World Bank to identify eligible consumers and implement validity checks before rollout of the new mechanism.

According to officials, the change is aimed at reducing misuse of electricity subsidies under the current system, where some households reportedly use multiple electricity meters to keep monthly consumption below the subsidised 200-unit threshold.

The government is also expected to hire an external firm by the end of the current month to develop the payment mechanism for the targeted subsidy programme.

Sources said Pakistan provided the assurances to the IMF as part of implementation commitments under the first review of the Resilience and Sustainability Facility (RSF) programme.

Officials said Pakistan is expected to secure the second tranche of around $200 million under the facility after approval by the IMF Executive Board, which is scheduled to meet on May 8 in Washington.

The government also informed the IMF about progress on other reform measures linked to the programme.

According to officials, the State Bank of Pakistan issued guidelines for management of climate-related financial risks in December 2025, while Securities and Exchange Commission of Pakistan introduced guidelines requiring listed companies to disclose climate-related risks and opportunities.

The government has also committed to expanding the digital e-Abiana irrigation service charge system, currently operational in Punjab, to Sindh, Khyber Pakhtunkhwa and Balochistan by August 2027.

In addition, officials said the government is working with the World Bank to develop irrigation water tariff adjustment mechanisms in Punjab and Sindh aimed at recovering operation and maintenance costs by February 2027.

Pakistan also informed the IMF that work was underway to establish a framework for coordinating federal and provincial disaster risk financing requirements under the National Disaster Risk Financing Strategy by August 2026.