ISLAMABAD: Pakistan and the International Monetary Fund (IMF) engaged in a virtual meeting to discuss the energy sector losses and the reduction of circular debt during the current fiscal year. The meeting aimed to address the issue of accumulating circular debt and find solutions for its elimination.
The Pakistani government has demonstrated its commitment to tackling circular debt by making adjustments to fuel prices. It would also be implementing quarterly tariff revisions. To further address this issue, the government shared a new Circular Debt Management Plan (CDMP) with the IMF.
However, concerns were raised by the IMF team regarding the sustainability of the CDMP, given the declining pace of recoveries. The government was urged to devise an effective strategy to address this challenge.
This was a virtual meeting at the technical level and it was expected that the newly inducted Minister for Finance Dr Shamshad Akhtar might hold a meeting with the IMF team virtually in the coming weeks.
The IMF mission is projected to conduct the first review in October or November, based on the official macroeconomic figures for the initial quarter (July-September) of the current fiscal year.
Pakistan and the IMF agreed on a $3 billion bailout package under a Standby Arrangement (SBA) in July 2023. As of now, Islamabad has secured $1.2 billion as an upfront installment. The remaining $1.8 billion is expected to be released through two reviews by the end of March or April 2024.
