IMF-Pakistan deal: Electricity prices to go up to control circular debt

ISLAMABAD: Pakistan has assured International Monetary Fund (IMF) to increase electricity prices in the current FY2023-24 to control increasing circular debt of the power sector.

Pakistan secured a badly needed $3 billion stand-by arrangement (SBA) from the International Monetary Fund on Friday, giving the South Asian economy a much-awaited respite as it teeters on the brink of default.

Sources having knowledge of the matter said Pakistan’s finance ministry and IMF have finalised the plan to control the circular debt in the current financial year.

According to the plan, the circular debt of the power sector will be curtailed to Rs2,340 billion for which Pakistan has also assured the international lender of release of Rs400 billion.

The amount will be released in installments, the sources said and added recoveries from the defaulters of the power sector will be improved.

The IMF has ‘warned’ Pakistan that failure to curtail circular debt of the power sector will be considered a violation of the agreement and conditions for the loan programme in the future will be tough.

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