Inflation To Increase.

New power tariffs were approved by the Economic Coordination Committee (ECC) on Friday. With the special financing surcharge instated on average power tariffs and additional cost adjustments, a major IMF condition has been fulfilled and the measure aims to generate about Rs 335 billion from consumers and contain circular debt flow. However, this measure relies on adjustment for cost increases from power sector consumers and the withdrawal of special subsidies also means that it is another burden to bear for the public.

At the moment, installing IMF measures to avoid sovereign default is the only way forward and so, such regressive policies are unavoidable. Experts have already predicted that this move means a significant addition to real inflation numbers as power is a significant piece of the consumer price pie. Even now, the structure of the adjustment aims to partially insulate consumers in the domestic sector with higher consumption bracket consumers paying more. However, further relief is not possible for those within the country.

Hopefully, the measure is enough to pacify the IMF as the government seems to be scrambling to fulfill the remainder and more difficult actions of the Programme...