IMF blocks Pakistan’s crypto power plan over grid strain, legal risks

The IMF also criticised the lack of prior consultation.

The International Monetary Fund (IMF) has rejected Pakistan’s proposal to offer subsidised electricity tariffs to crypto mining and other energy-intensive industries, according to a local business magazine called Profit. Officials say the plan, which aimed to attract foreign investment, could put further strain on the country’s already stressed power grid.

As per the report, during a meeting with the Senate Standing Committee on Power, Secretary of Power Fakhray Alam Irfan confirmed that the IMF had turned down the proposal. He said the global lender is worried about market distortions and legal uncertainties tied to crypto mining in Pakistan.

“The IMF has not agreed,” Irfan told the committee, Profit reports, noting that the agency had flagged several red flags in Pakistan’s energy subsidy plan. Chief among them: increased load on the grid, legal concerns surrounding crypto mining, and broader economic imbalances.

The IMF also criticised the lack of prior consultation. The fund warned that the proposal could disrupt energy markets and lead to unfair advantages for select industries, including crypto mining and metals.

Background

In May this year, Pakistan announced plans to allocate 2,000 megawatts (MW) of surplus electricity for crypto mining and data centers. The move was supported by the Ministry of Finance and driven by the Pakistan Crypto Council as part of a wider strategy to boost tech investment, according to the report by Profit.

Originally pitched in September 2024, the Power Division’s proposal included a six-month special tariff of Rs 23/kWh. But the IMF only approved a limited three-month version, citing risks of economic distortion.

A revised plan in November 2024 offered targeted subsidies to energy-heavy sectors to help consume surplus electricity. The IMF rejected that version as well, likening it to selective tax holidays that often distort markets and weaken fiscal discipline.

Despite the IMF’s pushback, Dr. Irfan said the government is still in talks with international partners to revise the proposal. “We’re working to refine the plan in a way that addresses global concerns while supporting local growth,” he said.

The committee meeting also focused on other energy-related issues. Senator Shibli Faraz slammed the government’s agreement with scheduled banks aimed at reducing circular debt, calling it coercive. He warned that the public may face additional levies in the future to repay these loans.

Secretary Irfan clarified that no new taxes have been imposed, and that the existing Debt Servicing Surcharge (DSS) of Rs 3.23 per unit will remain in place for the next five to six years.

Officials also shared updates on new technology being deployed to combat electricity theft, Profit adds. Irfan said 58 percent of electricity users fall into the "protected" category, paying a subsidised Rs 10 per unit, and that the government is working on expanding digital monitoring to reduce losses.

The Senate committee has directed the Power Division to submit a full report at the next meeting, covering the crypto power plan, debt agreement, and theft control measures.