Finance Minister Blames IMF-Backed Tariff Increases for Inflation Surge

Pakistan's Finance Minister Muhammad Aurangzeb has acknowledged that the nation's soaring inflation is primarily due to a series of IMF-backed economic reforms, which included massive tariff hikes and currency depreciation. During his testimony before the National Assembly, Aurangzeb outlined how gas prices skyrocketed by 840%, electricity tariffs surged by 110%, and the currency lost 43% of its value under the IMF program.

Key Factors Driving Inflation

• Gas Price Hikes: Gas tariffs saw a staggering increase of 520% in November 2023, with an additional 319% rise planned for February 2024.
• Electricity Tariffs: A 35% rise in November 2023 and 75% hike in February 2024 contributed to the escalation of costs for households and businesses.
• Currency Depreciation: The 43% depreciation of the Pakistani rupee exacerbated the cost of imports, driving inflation even higher.
• Global and Local Economic Pressures: Rising commodity prices, along with the lingering effects of the 2022 floods, further strained the economy.

Inflation Impact and Government Measures

• Inflation Rates: Inflation peaked at 29.2% in FY2023, significantly impacting the purchasing power of the population.
• Government Actions: In an effort to manage inflation, the government introduced measures targeting cartelization, smuggling, and hoarding while offering reduced energy prices and welfare support for vulnerable segments of the population.