Circular debt: Agreed target with IMF fully on track

ISLAMABAD: The Ministry of Power said on Sunday that agreed targets with the IMF were fully on track and the end December target for restricting the circular debt was well within the limits.

“The target agreed with the IMF is for managing the circular debt within certain limits during each quarter and the power sector is well within limit,” the Ministry of Power said in a statement issued on Sunday.

The spokesman for Power Division stated that there was a routine inter-ministerial correspondence which could not be termed an SOS call letter issued by the Power Division. Regular communication as per the budget strategy paper is shared with the Finance Division for keeping track of releases and expenditure.

The Finance Division seeks such information as part of the cash flow strategy. However, the author tried to link subsidies with the IMF target. The target agreed with the IMF is for managing the circular debt within certain limits during each quarter and the power sector is well within limit.

The spokesperson said that the Power Division regularly gets releases as and when due and during the first quarter of Jul-Sept 2024, the power sector got Rs128 billion in subsidies released. During 2nd quarter, Rs31 billion have already been released and more than Rs50 billion are in the pipeline. With the improved performance of loss and recovery, it is expected that the Power Division will safely remain within the target set for the end of December 2024.

The spokesperson stated that any effort that has alluded to the quarterly circular debt target agreed upon with the IMF and linked the compliance of targets with subsidy releases only, is misleading as the circular debt management includes many other factors besides subsidies.

The spokesperson said that as per the agreed target with the IMF, the power sector is required to maintain a circular debt addition of less than Rs461 billion by the end of December 2024. In this regard, it is clarified that as of 19th December 2024, the CD flow has reached only Rs70 billion which is well below the target agreed for the end of December 2024. This is much less than the target agreed and it is expected that the achievement of the target is very much in control.