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Friday June 21, 2024

Pakistan, IMF hold virtual talks on energy sector

The circular debt continues to rise in power sector and currently stands at Rs2.5 trillion

By Our Correspondent
August 24, 2023
The seal for the International Monetary Fund is seen in Washington, DC on January 10, 2022. — AFP
The seal for the International Monetary Fund is seen in Washington, DC on January 10, 2022. — AFP

ISLAMABAD: Pakistan and the International Monetary Fund (IMF) on Wednesday held virtual talks on the overall losses of energy sector, especially in the context of reducing the circular debt during the current fiscal year.

The government demonstrated its commitment to adjust fuel price and quarterly tariff with the objectives to erase accumulation of circular debt.

The circular debt continues to rise in power sector and currently stands at Rs2.5 trillion. The government has shared the revised Circular Debt Management Plan (CDMP) with the IMF, for which the baseline tariff was already hiked. Now the FAP and quarterly tariff adjustment would be revised upward in order to reduce accumulation of the circular debt. The IMF team raised the issue of sustainability of the CDMP as the pace of recoveries declined. The government was asked to chalk out an effective strategy to tackle this issue. This meeting was held virtually at technical levels and it was expected that the newly inducted Minister for Finance Dr Shamshad Akhtar might hold a meeting with the IMF team virtually in coming weeks.

The IMF mission is expected to hold the first review in October or November on the basis of official macroeconomic figures for first quarter (July-Sept) period of the current fiscal year.

Pakistan and the IMF struck $3 billion bailout package under Standby Arrangement (SBA) in July 2023, out of which Islamabad so far secured $1.2 billion as upfront installment. Now, two reviews would be done to release the remaining $1.8 billion till the end of March/April 2024.