WASHINGTON: The International Monetary Fund places Pakistan among the countries that spend 4 to 8 per cent of their GDP on providing energy subsidies.

In a report, the IMF estimates that Pakistan would be spending a total of $10.15 billion on energy subsidies during the current fiscal year. The biggest proportion of this, $7.40 billion, would be spent on natural gas, $1.35 billion on petroleum and $1.40 billion on coal.

However, the IMF also noted that the country was “implementing plans to reduce costly and inefficient electricity subsidies … while boosting support for the most vulnerable”.

Take a look: Power sector subsidy reduced by Rs250bn

It said the government had taken steps for “rationalising energy subsidies by 0.4pc of GDP”.

A planned tariff adjustment will reduce the electricity subsidies to 0.3pc of GDP in fiscal 2015-16 from around 0.8pc in the current year and will lower power sector arrears by 0.1pc of GDP.

But the report warned that “increased volatility in oil prices could affect efforts to reform energy subsidies”.

Published in Dawn, July 27th, 2015

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