IMF Rejects Pakistan’s Electricity Subsidy Proposal for Cryptocurrency Mining
The International Monetary Fund (IMF) has turned down Pakistan’s initiative to provide subsidized electricity rates for cryptocurrency mining operations, highlighting several major concerns regarding the proposal. During a meeting with the Senate Standing Committee on Power, Secretary of Power Dr. Fakhray Alam Irfan stated,
“Currently, the IMF has not accepted the plan,”
as the government continues discussions with global financial institutions to modify their strategy.
Concerns Over Energy Sector Impact
Reports suggest that the IMF is worried about the potential impact this plan could have on the energy sector. Specifically, Dr. Irfan emphasized that the agency is apprehensive about market distortions stemming from the planned subsidization of energy tariffs, which is intended for miners and data centers.
In a previous statement, the IMF expressed its reservations about Pakistan’s commitment to supporting Bitcoin mining. The organization raised issues related to the legality of crypto mining activities within the country and the extra pressure it could place on an already strained power grid. Moreover, there are concerns regarding resource allocation and the ripple effects this initiative could have on electricity tariffs. Notably, the IMF pointed out that Pakistan had not consulted them prior to announcing the proposed subsidies.
Government’s Plan for Cryptocurrency Mining
Earlier this year, the Pakistani government unveiled a plan to dedicate 2,000 megawatts of electricity for cryptocurrency mining and data storage facilities, aiming to entice foreign investments into the sector. This initiative was spearheaded by the Pakistan Crypto Council and received backing from the Ministry of Finance.
Ongoing Negotiations and Future Discussions
Despite the IMF’s rejection, Dr. Irfan reassured that negotiations are ongoing to reshape the power subsidy plan. During the same committee meeting, members also discussed technological advancements to fight electricity theft and the government’s recent agreements with banks aimed at reducing the circular debt crisis. Senator Shibli Faraz raised concerns, suggesting that banks were coerced into providing these loans under duress. The committee has mandated the Power Division to provide comprehensive responses to various points of scrutiny in their next session.
