IMF 'concerned' over Pakistan's power sector circular debt rise

During the virtual talks with the IMF, Pakistan authorities shared the plan of additional 100 billion rupees increase int eh circular debt in the power sector during the current fiscal year.

Sources indicate that by June 2025, the circular debt in the power sector is expected to surpass Rs 2,550 billion.

Currently, the circular debt has already exceeded Rs2,400 billion, prompting discussions with the global lender. The International Monetary Fund has expressed serious concerns over Pakistan’s inability to control this growing debt, the sources said.

Read more: Pakistan not on IMF agenda till Sept 18

Meanwhile, Pakistan has assured the IMF of timely tariff adjustments to manage the circular debt.

The IMF has demanded that the circular debt in the power sector should not exceed 2,500 billion rupees. However, sources reveal that even during the last fiscal year, the shared plan with the IMF to control the debt was not successfully implemented.

According to IMF conditions, the circular debt was supposed to be controlled at 2,310 billion rupees for the current fiscal year. If this condition is not met, it could lead to a violation of the loan agreement.