The revision of the plan to reduce circular debt in Pakistan’s energy sector by 952 billion rupees (410 billion rubles) was recommended by the IMF to the Pakistani authorities, considering the existing plan (CDMP) unsustainable, The Express Tribune reported on February 2, citing government sources.
The IMF has reportedly advised Pakistan to cover 675 billion rupees (290 billion rubles) of over-budget subsidies through higher tariffs in the energy sector, as well as other tax increases.
According to the agency, the IMF has criticized the Pakistani government’s intention to combine additional subsidies with tariff increases. In particular, the IMF suggested that the government withdraw an assistance package for export industries for 143 billion rupees (61.5 billion rubles), since 123 billion of these funds have nowhere to be financed.
Recall that at the time of planning the budget, the Pakistani government included in it subsidies in the energy sector for only 355 billion rupees (153 billion rubles), but for now it is going to increase this amount to 1.03 trillion rupees (443 billion rubles). ).
Previous plans to reduce circular debt by raising tariffs for households and businesses need to be adjusted upward now due to the sharp depreciation of the Pakistani rupee against the US dollar (which is largely tied to the cost of energy for Pakistan), as well as an increase in the main interbank lending rates in the southern province of Sindh from 16.84% to 18%.
It should be noted, according to experts, that IMF assistance is the “last chance” to save the Pakistani economy, since all “friends” abroad are in no hurry to help the country with money. Negotiations with the IMF began on January 31 in Islamabad and are expected to last 10 days.
Source: Rossa Primavera
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