Pakistan assures IMF of phasing out gas subsidy by January 2027

Pakistan has assured the International Monetary Fund (IMF) of phasing out the Rs140 billion cross-subsidy extended to gas consumers by January 2027. Under the proposed reform plan, gas and electricity subsidies will no longer depend on consumption slabs. Instead, assistance will be determined according to household income, with beneficiary identification carried out through data from the Benazir Income Support Programme (BISP). Senior officials from the Petroleum Division said the existing mechanism offers subsidised gas tariffs to protected consumers and some non-protected users, while the financial burden is shifted to industries, commercial consumers, CNG stations, cement manufacturers, and households with higher gas usage. Officials explained that the revised framework would introduce a uniform average gas tariff for all consumers, while low-income families would receive direct government support. At present, the average gas tariff is around Rs1,750 per MMBtu, whereas protected consumers are paying substantially lower rates, according to officials. Separately, Federal Finance Minister Muhammad Aurangzeb held a key meeting with an IMF delegation in Islamabad to discuss Pakistan’s economic outlook, preparations for the upcoming federal budget, and progress on economic reforms. Both sides continued discussions on the wider reform agenda, with expectations that the next budget will focus on fiscal consolidation and maintaining macroeconomic stability. The IMF team was headed by Mission Chief Eva Petrová. The meeting was also attended by the State Bank governor, the finance secretary, the chairman of the Federal Board of Revenue, and other senior officials. SBP receives $1.3 billion under IMF’s EFF and RSF programs