Pakistan could face further electricity tariff increases as the International Monetary Fund (IMF) pushes the government to keep power prices aligned with costs to prevent the country’s circular debt from growing.
The warning comes as Pakistan’s total energy-sector circular debt has reached Rs. 5,286 billion, including Rs. 1,675 billion in the power sector and Rs. 3,611 billion in the gas sector.
The IMF has stressed the need for timely tariff adjustments, meaning electricity prices should be revised when the cost of supplying power changes instead of allowing the resulting financial gap to accumulate.
The Fund considers controlling the flow of new circular debt a major challenge for Pakistan’s energy sector. It has called for faster reforms to reduce losses and improve the financial performance of power companies.
Recent data also shows the pressure on the power sector remains significant. The electricity circular debt increased by Rs. 364 billion during fiscal year 2025-26, with inefficiencies, weak bill recoveries and payment disputes contributing to the increase. A further Rs. 75 billion was attributed to delayed tariff adjustments.
The IMF has also urged Pakistan to continue cost-based gas tariff adjustments, which would bring gas prices more closely in line with the cost of supplying it.
For electricity, regular tariff revisions can mean higher bills for consumers when the cost of generation and supply rises. The IMF has previously said tariff changes should protect lower-income households from bearing an excessive burden.
The government has committed to reducing the flow of new circular debt in the power sector during the current fiscal year.
The IMF has warned that continued weaknesses in Pakistan’s energy sector pose a risk to fiscal stability. The government is therefore under pressure to reduce losses, improve collections, control inefficiencies and ensure that electricity and gas tariffs recover their costs.
With the energy sector’s combined circular debt now at Rs. 5,286 billion, the pressure to keep tariffs aligned with costs could translate into further price increases for consumers.
