IMF-Driven Reforms: Pakistan’s Strategic Move with Rs140 Billion for Power Sector

In adherence to the stipulations set forth by the International Monetary Fund (IMF), Pakistan has disbursed a sum of Rs140 billion to government-operated power plants, taking a significant step towards mitigating the persistent issue of circular debt in the nation’s energy sector.

To align with the IMF’s conditions for the fiscal year 2023-24, Pakistan is mandated to curtail the circular debt in the energy sector by a substantial Rs400 billion. As delineated in a finance ministry document, an allocation of Rs57 billion has been directed to Karachi Electric for the explicit purpose of tackling the circular debt conundrum. Sources indicate that an additional Rs260 billion is earmarked for the power sector, while Rs65 billion is slated for disbursement to gas companies in the fiscal year 2023-24.

Within the ambit of the IMF’s Stand-By Arrangement (SBA) program, Pakistan is diligently working towards fulfilling the prerequisites for the upcoming staff-level agreement. The country’s commitment to adhering to the conditions outlined by the IMF was underscored by the caretaker federal government, which previously provided assurance to the international financial institution regarding the maintenance of the power sector’s circular debt at Rs2.31 trillion.

Presenting a comprehensive overview before the Senate Standing Committee for Power, the Power Division highlighted the measures being undertaken to address and control the circular debt within the power sector. This strategic move is in line with Pakistan’s overarching goal to navigate the challenges posed by the circular debt crisis and enhance the stability of its energy sector.

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