ISLAMABAD: The Pakistani government acknowledged on Wednesday that substantial hikes in gas and electricity tariffs, along with a sharp depreciation of the currency, have significantly driven inflation under the ongoing International Monetary Fund (IMF) program. Finance Minister Muhammad Aurangzeb admitted that the record increases in utility prices, including a 520% rise in gas tariffs in November 2023 and a 75% increase in electricity charges, have contributed to the country’s high inflation.
In a testimony to the National Assembly, Aurangzeb explained that the government had implemented these increases to meet IMF demands under its stabilization program. Gas tariffs saw a 520% rise in November 2023, followed by another 319% increase in February 2024, while electricity prices jumped by 35% in November and another 75% in February 2024.
The finance minister also highlighted that the depreciation of the Pakistani rupee, which lost 43% of its value against the dollar since July 2019, worsened inflation. In addition to utility hikes, commodity prices such as sugar, palm oil, and wheat saw sharp increases, exacerbating inflationary pressures.
The minister attributed the rising inflation, which peaked at 29.2% in FY2023, to these factors, along with damages from the 2022 floods that severely impacted agriculture, contributing to food inflation. The government has taken steps to control inflation, including measures to curb profiteering, control smuggling, and stabilize the exchange rate. Despite these efforts, the financial strain on ordinary Pakistanis remains significant.
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PRESS UPDATE