Pakistan’s power sector cyclical debt increase has the IMF “concerned.”

The intention to expand the circular debt in the electricity sector by an additional 100 billion rupees during the current fiscal year was shared by Pakistani authorities during the virtual talks with the IMF.

It is anticipated that the circular debt in the power industry will exceed Rs 2,550 billion by June 2025, according to sources.

Talks with the international lender have been prompted by the circular debt, which currently exceeds Rs 2,400 billion. According to the sources, Pakistan’s incapacity to manage its mounting debt has raised major concerns for the International Monetary Fund.

Pakistan has promised the IMF that timely tariff adjustments will be made in order to manage the circular debt.

The IMF has mandated that the electricity sector’s circular debt be limited to 2,500 billion rupees. Still, reports indicate that the joint debt control strategy with the IMF was not carried out satisfactorily even in the most recent fiscal year.

IMF requirements said that for the current fiscal year, the circular debt was to be kept under control at 2,310 billion rupees. A breach of the loan agreement may result from failure to meet this requirement.