ISLAMABAD: The International Monetary Fund (IMF) has credited Pakistan with making visible progress in stabilising its long-ailing energy sector through tariff rationalisation and structural reforms, even as it urged the government to push ahead with deeper, cost-reducing changes to secure long-term viability.
In its latest review of Pakistan’s Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF), the IMF said the government had “reinforced energy sector viability through prompt tariff rationalization and structural reforms,” noting that “circular debt flow targets in the power sector have been achieved.”
The Fund highlighted that timely price adjustments were already paying off. “Timely implementation of power tariff adjustments has helped reduce the stock and flow of circular debt,” Deputy Managing Director Nigel Clarke said in a statement accompanying the review.
The Fund acknowledged improvements in recoveries, reduced losses and stronger enforcement by power distribution companies (Discos), which helped contain circular debt. These steps, it said, were “a necessary step toward improving efficiency, lower costs and reducing the need for fiscal support.”
But the lender stressed that Pakistan must now shift from short-term fixes to durable overhaul. “Efforts now need to focus on improving Disco collections and losses, cost-reducing structural reforms, including Disco and Genco private sector participation, advancing the wholesale electricity market, and addressing the gas sector’s RLNG surplus and CD stock,” the staff appraisal noted.
Similarly, the fund also acknowledged government’s efforts to stabilise its troubled gas sector through tariff adjustments and tighter oversight but warned that deeper reforms are needed to address systemic financial distortions.
