IMF Should Assist Pakistan in Maintaining Its Electricity Rights

For the last week, there have been widespread demonstrations in Pakistan protesting a recent increase in power costs. Protests have turned violent in a few locations. The government-approved price increase comes at a time when Pakistan is experiencing one of its worst economic crises ever, endangering the rights of millions of people to food, health care, and a decent quality of life.

The situation in Pakistan has been exacerbated by the inability of successive administrations to overhaul the energy industry in the nation. The current price rise, however, is a component of a US$3 billion agreement between Pakistan and the International Monetary Fund (IMF), which was agreed in July 2022 and requires the government to eliminate gasoline and energy subsidies, switch to a market-based exchange rate, raise taxes, and implement other measures. The interim administration of Pakistan said on Tuesday that it has asked the IMF for a concession on behalf of the millions of Pakistanis who are having difficulty paying their power bills.

In addition to placing a heavy financial strain on governments, fossil fuel subsidies inflate the prices of both production and consumption, increasing reliance on fossil fuels at a time when governments need to be shifting to renewable energy sources in order to address the climate catastrophe. However, cutting subsidies without sufficiently funding social security often results in price rises that disproportionately affect those with lower incomes. Increases in the price of electricity may also raise the cost of housing, food, and other necessities. According to Human Rights Watch, everyone has the same right to enough, dependable, safe, clean, cheap, and accessible energy, regardless of their background or gender.

An extensive evaluation of the effects of these changes should be conducted by the IMF and the Pakistani government to make sure that eliminating fossil fuel subsidies enhances rather than diminishes rights. They should implement a thorough reform strategy that may reduce price rises and speed up the switch to renewable energy sources before gradually eliminating subsidies. One of these changes may be the implementation of a universal social protection system, which would provide benefits to groups like children, the elderly, and the disabled who are more vulnerable to economic instability. The IMF has traditionally supported universal systems, and research indicates that these programs are significantly more successful than those that focus eligibility based on socioeconomic class.

The IMF and the government of Pakistan should take note of the demonstrations. Addressing climate change and promoting social and economic rights are not mutually exclusive endeavors. If organizations and governments are prepared to take a rights-respecting stance, both can be accomplished.

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