The Pakistani government has formally presented a comprehensive plan to the International Monetary Fund (IMF) aimed at eliminating the mounting Rs3 trillion circular debt in the gas sector. This initiative is part of the country’s upcoming budget preparations and a broader effort to stabilize the energy sector.
According to official sources, the Petroleum Division crafted the detailed plan, which outlines a range of strategies to curb the financial crisis in the gas sector. These include potential use of profits from state-owned enterprises (SOEs) to reduce debt, instead of passing the burden onto consumers.
The circular debt in the gas sector has reached an alarming level, prompting urgent discussions between Pakistani authorities and the visiting IMF mission. During the talks, Pakistan presented in-depth data, including five-year performance reports, balance sheets, and financial statements of gas companies.
Key issues discussed included government subsidies, the sector’s financial structure, and the impact on end users. Officials highlighted that with disciplined reforms and financial restructuring, the country could eliminate circular debt in the gas sector within five years.
While the IMF has not yet approved the plan, negotiations remain ongoing as both sides work toward finalizing a framework that could influence Pakistan’s 2025-26 federal budget. The success of this plan is seen as critical to Pakistan’s economic recovery and continued access to IMF support.