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Pakistan has allocated Rs140 billion to government-operated power plants to address the issue of circular debt in the energy sector, as per the requirements set by the International Monetary Fund (IMF). This move is part of Pakistan’s efforts to decrease circular debt in the energy sector by Rs400 billion during the fiscal year 2023-24.
According to a finance ministry document, Rs57 billion has already been granted to Karachi-Electric to tackle the circular debt issue. In the fiscal year 2023-24, Pakistan plans to allocate Rs260 billion to the electricity industry and Rs65 billion to gas businesses. This decision demonstrates Pakistan’s commitment to meeting the conditions set by the IMF as part of the $3 billion Stand-By Arrangement program.
The IMF staff and Pakistani authorities reached a staff-level agreement on policies to be supported by the Stand-By Arrangement, which is subject to approval by the IMF Executive Board. Pakistan’s efforts to address circular debt in the energy sector are a crucial step towards stabilizing the economy and improving the country’s financial situation.