The International Monetary Fund (IMF) has called on Pakistan to submit a comprehensive plan to address the gas sector’s circular debt, which has ballooned to Rs. 2,800 billion, according to official sources.
In response, the federal government has begun drafting a debt resolution strategy that includes securing bank loans of up to Rs. 2,000 billion on concessional terms. Negotiations are underway with banks to explore interest waivers or reductions, particularly on Rs. 800 billion in outstanding interest payments, sources revealed.
Proposed Measures to Tackle Debt
To support debt repayments, the government is considering imposing a petroleum levy ranging from Rs. 3 to Rs. 10 per litre, which could generate an estimated Rs. 180 billion annually. Additionally, a gas bill surcharge is under discussion as another potential repayment mechanism.
The proposed plan outlines a phased repayment strategy over five years. However, officials emphasized that resolving the circular debt crisis will also require addressing the significant operational losses incurred by Sui gas companies and other state-owned oil and gas firms.
Broader Economic Implications
The IMF’s demand for a clear debt resolution plan comes as Pakistan continues to grapple with economic challenges, including fiscal deficits and rising inflation. The proposed measures, while aimed at stabilizing the energy sector, could have broader implications for consumers and businesses.
