IMF talks to focus on reforms, privatisation

ISLAMABAD:

The government and the IMF will hold talks next week for the fourth economic review. Discussions are expected to focus on energy sector reforms, privatisation and a plan to settle the circular debt in the electricity and gas sectors.

According to sources, the government will brief the IMF on reforms in the electricity and gas transmission systems as well as measures aimed at increasing private-sector participation in the energy sector. The two sides are also expected to discuss changes in the basic electricity tariff.

The government has finalised the tariff for the competitive electricity market, but the bidding process has yet to begin. Meanwhile, notices inviting expressions of interest have already been issued for the privatisation of the Islamabad, Faisalabad and Multan electric supply companies (DISCOs).

Both local and foreign investors have expressed interest in acquiring the distribution companies. The government has set a target of keeping the power sector's circular debt at Rs1,614 billion. A revision in the basic electricity tariff is expected in January 2027.

For next year, the government has proposed providing electricity subsidies to eligible consumers through the Benazir Income Support Programme (BISP). However, the proposed move towards full cost recovery in electricity tariffs and the elimination of cross-subsidies could lead to higher tariffs.