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The IMF and the elephant in the energy sector

The International Monetary Fund (IMF) is not wrong to say that Pakistan’s power sector subsidy regime needs reform. Any serious policy practitioner knows that the present tariff structure is fiscally expensive, administratively weak, and vulnerable to misuse. But the IMF is wrong in how it has framed the problem, sequenced the solution, and identified the culprit. Under the Resilience and Sustainability Facility, the government has committed to replacing the budgeted electricity tariff differential subsidy and cross-subsidy system with a targeted subsidy framework for low-income consumers, to be disbursed through the Benazir Income Support Programme (BISP) by the end of January 2027. On paper, this sounds neat. In practice, it risks becoming another exercise where the poor are asked to pay for the sins of the power sector’s political economy. Firstly, the IMF’s core assumption is analytically weak. It argues that better-targeted subsidies will reduce incentives for higher-income cons...
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PM Shehbaz credits 'political-military partnership' for Pakistan's recognition as US-Iran mediator, changed image

Prime Minister Shehbaz Sharif has termed Pakistan’s emergence as a key mediator between the US and Iran as a “shining moment in our history”, crediting the “political-military partnership” for the change in the country’s image internationally. The premier made these remarks during an interview with The Sunday Times, as Islamabad remained engaged in efforts for de-escalation between the US and Iran. “It’s one of the shining moments in our history. Pakistan is acknowledged worldwide as an honest mediator and as a country in which international leadership has full trust and faith. It’s our shining hour, and I feel a very proud Pakistani — as do 240 million Pakistanis,” he was quoted as saying in the interview published on Saturday night. The PM’s expressed optimism even as military pressure and fears of renewed confrontation continue to shape the conflict that began with US-Israeli strikes on Iran in late February. While a deal for a complete end to the war is yet to happen, hostili...
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India-Pakistan dialogue push gains steam in held Kashmir too

ISLAMABAD: Just days after the first anniversary of Marka-i-Haq, calls for dialogue with Pakistan have grown in India, with several leaders in India-held Kashmir among the latest to support efforts to end hostilities between the neighbouring nuclear powers. Former chief ministers of India-held Kashmir, Farooq Abdullah and Mehbooba Mufti, have backed the recent demand by Rashtriya Swayamsevak Sangh (RSS) Secretary General Dattatreya Hosabale for the Indian government to hold peace talks with Pakistan, alongside promoting people-to-people contact between the two countries. According to India’s NDTV report, both Abdullah and Mufti have faced criticism in the past for advocating talks with Pakistan amid deepening hostilities between the two countries. However, the situation appears to be different this time. “It is a very significant move that the RSS leader called for talks with Pakistan, and a former army chief [retired Gen Manoj Naravane] has backed his statement. I am glad that s...
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Iran conflict reshapes energy markets as US gas demand surges

WASHINGTON: The United States is entering a period of structurally higher industrial natural gas demand, with consumption expected to remain at record levels through at least 2027, even as the Iran war intensifies disruptions across global oil markets and tightens energy supplies worldwide. According to the latest Short-Term Energy Outlook (STEO) from the US Energy Information Administration (EIA), industrial natural gas consumption in the United States averaged a record 23.6 billion cubic feet per day (bcfd) in 2025, exceeding the previous high of 23.4bcfd recorded in 2023. The projections suggest that rising industrial demand is no longer merely cyclical, but increasingly tied to deeper structural shifts in manufacturing, energy trade flows and global supply-chain realignment. The EIA expects industrial gas consumption to rise by another 1.2 per cent, or 0.3bcfd, in 2026, followed by an additional 1.7pc increase, or 0.4bcfd, in 2027. At the centre of the trend is sustained expan...
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Punjab relaxes market timing curbs till June 1

• Decision comes in response to traders’ protests, appeals by shopping malls association and general public • Lahore Chamber of Commerce welcomes move, describes it as ‘important business-friendly’ step • Khyber Pakhtunkhwa governor, CM resolve to ease restrictions in their province as well LAHORE: Responding to traders’ protests and appeals by the shopping malls association and general public to revise 8pm business closure timings, the Punjab government has granted partial relief and lifted the restriction on market timings until June 1. The Punjab Services and General Administration Depa­r­tment’s (S&GAD) Impleme­ntation and Coordination Wing on Friday notified that “all the shops, markets, shopping malls, hotels, restaurants and food outlets are exempted from the prescribed closure timings till June 1, 2026”. On April 6, the federal government announced that all markets across the country, barring Sindh, would close by 8pm throughout the week as part of energy conservation m...
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Govt reduces petrol, diesel prices by Rs5

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The federal government on Friday reduced petrol and diesel prices by Rs5, according to a notification issued by the Petroleum Division. According to the notification, the revised prices will take effect from May 16. Following the decrease, the price of petrol stands at Rs409.78 per litre and that of HSD at Rs409.58. Petrol is mostly used in private transport, small vehicles, rickshaws and two-wheelers and has a direct bearing on the budget of the middle and lower-middle class. High-speed diesel is mainly used in the heavy transport sector and for large generators. The government has been revising petroleum prices every week on Friday night following the now-paused US-Israeli war on Iran , which began on February 28. The war also led to a global fuel crunch caused by the closure of the Strait of Hormuz, through which one-fifth of the world’s supply of oil and gas used to pass in peacetime. Last week, the government approved a hike of Rs14.92 per litre i...
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Growth below target

PAKISTAN’S latest GDP figures offer a picture of modest recovery. A projected growth rate of 3.7pc for the current fiscal falls short of the government’s original 4pc target. This is slightly less than even the lower bound of the State Bank’s projected range of 3.75-4.75pc . But it is still an improvement over the previous year’s 3.18pc expansion. Thankfully, the SBP anticipates growth, albeit tepid, during much of next year in case energy prices stay elevated and the Gulf crisis lingers. That said, the numbers show that the economy continues its struggle to break out of the low-growth trap. Structural issues are constraining long-term, faster growth prospects without overheating the economy. In this context, even modest growth is welcome after four years of economic instability, external financing crises and inflationary shocks, and despite oil price hikes triggered by the Gulf conflict. The economy’s size has increased to over $452bn while per capita...
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