Power Ministry confirms circular debt management on track with IMF agreement

ISLAMABAD: The Ministry of Power announced on Sunday that it is on track to meet the targets set in collaboration with the IMF, specifically regarding the management of circular debt. The objective is to maintain circular debt additions at below Rs461 billion by the end of December 2024, The News reported.

The Ministry’s statement indicated that the power sector is operating within the agreed limits outlined in the IMF arrangement, which mandates keeping circular debt under control during each quarter.

According to a spokesperson for the Power Division, recent inter-ministerial communications should not be misconstrued as an emergency SOS from the Power Division; rather, they are part of routine correspondence to ensure budgetary strategies align with cash flow management.

Regular updates regarding releases and expenditures are shared with the Finance Division as part of this process. The spokesperson refuted claims linking subsidies directly to IMF targets, clarifying that the management of circular debt involves various factors beyond just subsidies.

During the first quarter (July-September 2024), the power sector received Rs128 billion in subsidies, with Rs31 billion already disbursed in the second quarter and an additional Rs50 billion expected soon. The Ministry anticipates maintaining compliance with the targets set for the end of December 2024 due to improved performance in losses and recoveries.

Furthermore, the spokesperson emphasized that, in relation to the IMF agreement, as of December 19, 2024, the circular debt flow has amounted to only Rs70 billion, significantly lower than the targeted cap for the end of December 2024, indicating that the power sector is well-positioned to achieve its targets.

Web Desk Karachi