IMF Opposes Pakistan's Energy Subsidies for Crypto Mining and AI

Pakistan's strategic initiatives to leverage emerging technologies, including cryptocurrency mining and artificial intelligence, are encountering considerable resistance from the International Monetary Fund (IMF). The IMF has consistently opposed proposals for energy subsidies and the allocation of surplus power to these burgeoning sectors. This ongoing divergence underscores a fundamental tension between Pakistan's national development priorities and the IMF's broader concerns regarding international financial stability concerns, a critical point given Pakistan's inherently fragile energy infrastructure.

IMF's Fiscal Concerns

The IMF's opposition is primarily rooted in deep-seated concerns over the stability of Pakistan's energy sector. The Fund has repeatedly warned that extending preferential tariffs or subsidies to energy-intensive industries, like cryptocurrency mining, could worsen the nation's prevailing energy crisis, thereby jeopardizing wider economic recovery initiatives. This stance was corroborated by Dr. Fakhray Alam Irfan, Minister of Energy, during a Senate Standing Committee on Energy session, where he emphasized the imperative of safeguarding Pakistan's economic health.

Over the past several months, distinct Pakistani proposals have undergone rigorous scrutiny from the IMF. For instance, in September 2024, a six-month tariff package was proposed, offering rates as low as 23-24 Pakistani rupees (approximately $0.08) per kilowatt-hour across various sectors, including cryptocurrency mining. However, the IMF's intervention resulted in the proposed concession period being significantly curtailed to only three months. Furthermore, in November 2024, an initiative by Pakistani authorities to introduce subsidies as a means to stimulate the consumption of surplus electricity was similarly rejected, with the IMF citing the potential for adverse economic impacts from such "tax holidays."

Strategic Digital Ambitions

This divergence persisted into May 2025, when Pakistan unveiled plans to dedicate an additional 2,000 megawatts of surplus electricity specifically for the advancement of its cryptocurrency mining and AI sectors. The IMF once again critiqued this decision, asserting its potential to detrimentally affect the wider energy market and overall economic stability. Notwithstanding this enduring international skepticism, the Pakistani government, as stated by Minister Irfan, remains resolute in its commitment to engage with stakeholders and intends to broaden its efforts to combat electricity theft – a pivotal challenge for the energy sector's sustained viability.

Beyond the scope of energy allocation, Pakistan has also articulated its aspiration to establish its own Bitcoin reserve. This strategic endeavor, reportedly drawing inspiration from initiatives in the United States, underscores a wider national interest in integrating digital assets into its foundational financial framework, even while it navigates the fiscal prudence advised by international lenders concerning its energy policies.