The International Monetary Fund (IMF) has expressed concerns over Pakistan’s proposed energy sector reforms, stating they fail to tackle the fundamental issues, as reported by Business Recorder.
IMF Mission Chief Nathan Porter highlighted the need for comprehensive reforms to ensure economic recovery and fiscal stability. The proposals, according to Porter, miss crucial aspects such as reducing energy costs, enhancing compliance, addressing theft, and improving governance within the energy sector.
Porter criticized the plans for not effectively addressing circular debt neutrality and potentially increasing the financial burden on vulnerable households. He also pointed out fiscal risks associated with the circular debt reduction strategy and its reliance on supplementary grants, which have previously strained Pakistan’s finances.
Despite these criticisms, the IMF remains open to collaboration with Pakistan and its partners to develop a sustainable reform approach that could lower tariffs for all consumers. The government’s defense of its strategy and ongoing discussions with the IMF suggest an awareness of the challenges ahead, particularly in managing the sector’s circular debt, which is proposed to be settled through government funding.
