Adhering to the International Monetary Fund’s (IMF) stipulations, Pakistan has allocated Rs140 billion to government-operated power plants to mitigate the circular debt within its energy sector.
As revealed in an official finance ministry document, this decision aligns with the IMF’s mandate for Pakistan to reduce its energy sector’s circular debt by Rs400 billion in the fiscal year 2023-24.
The finance ministry’s documentation indicates that Rs57 billion has been directed to Karachi-Electric to tackle the circular debt issue. In the fiscal year 2023-24, Pakistan plans to allocate Rs260 billion to the power sector and Rs65 billion to gas companies, as per sources close to the matter.
Currently part of the IMF’s Stand-By Arrangement (SBA) program, Pakistan strives to meet the prerequisites for the next staff-level agreement. This includes the government’s recent commitment to the IMF to maintain the power sector’s circular debt at Rs2.31 trillion, as reported to the Senate Standing Committee for Power by the Power Division.
The caretaker federal government’s assurance to the IMF is a significant step in adhering to the international lender’s conditions for the country’s economic management.
