IMF asks Pakistan for swift reforms in energy sector

ISLAMABAD: The International Monetary Fund (IMF) has urged Islamabad for “strong cost-side reforms” for restoring the viability of Pakistan’s energy sector.

In its staff report for the second and final review under the recently-concluded $3-billion Stand-By Arrangement, the IMF said Pakistan should be able to meet its fiscal year 2023-24 circular debt management plan (CDMP) target of Rs2.3 trillion with zero net zero stock accumulation.

“Timely notification of the FY25 annual rebasing will be critical to the continued prevention of further circular debt flow, as will further collections efforts, including steps to enhance and institutionalise digital monitoring,” the IMF said in its report.

“In parallel, the authorities should press ahead with agricultural tube well subsidy reform, for which a finalised plan is targeted by end-FY24.”

“Delays in post-programme external financing disbursements would also place further pressure on banks to finance the government (further exacerbating crowding out of the private sector). Geopolitically driven higher commodity prices and disruptions to shipping, or tighter global financial conditions, would also adversely affect external stability,” the IMF stated.

The lender has also called Pakistan to end power subsidies given to industry sector in upcoming FY24-25 budget.

It is pertinent to mention here that the technical experts’ team of the International Monetary Fund (IMF) has landed in Pakistan for talks on a fresh loan programme and budget preparations.

The team will stay in Pakistan for more than 10 days, while other members of the IMF mission are likely to reach Pakistan on the night of May 16, the sources said.

The mission will hold talks with Islamabad for a fresh loan programme.

Earlier sources said that the government had expedited preparations for the budget targets before the arrival of the IMF mission. In this regard, the Ministry of Finance has directed relevant ministries to complete targets expeditiously.

The sources said the framework for all important budgetary targets would be prepared and sent to the IMF.

According to sources, the approval of a strategic paper on the FY25 budget will also be sought from the federal cabinet before the arrival of the IMF mission.