IMF and government fail to reach agreement on circular debt reduction

The federal government and the International Monetary Fund (IMF) have not been able to agree on a settlement plan to reduce the circular debt by Rs 1,700 billion.

Sources say that the IMF has presented new conditions for the gas sector circular debt settlement plan. The total circular debt of the gas sector in the country has reached Rs 3,300 billion, on which the IMF has expressed concern and the IMF has given suggestions to the government to reduce the circular debt.

In this regard, in the virtual talks between the members of Pakistan’s economic team and the IMF team, a detailed discussion was held on the settlement plan prepared by the government team to reduce the circular debt by Rs 1,700 billion and the government team tried to convince the IMF on this settlement plan. However, the government and the IMF have not been able to agree on this settlement plan. The final talks on this issue between the parties will now take place on the occasion of the next economic review expected in September.

According to sources, the IMF has also presented new conditions for the circular debt settlement plan and has suggested that these conditions be met before the next phase of negotiations. According to sources, the IMF is of the opinion that the losses of gas companies should also be recorded in the settlement plan, and the recoveries that are to be made should also be considered as losses of liabilities.

According to sources, IMF officials say that after booking the total loss, the companies should be recapitalized. Petroleum Division officials have objections to the IMF conditions for the settlement plan. According to sources, the final talks with the IMF on the settlement plan will be held in September. The settlement plan to reduce the circular debt will be prepared in consultation with the IMF.