Prime Minister Shehbaz Sharif announced on Thursday that the International Monetary Fund (IMF) has pledged support to Pakistan in light of the ongoing flood situation. His remarks followed the signing of a Rs 1.225 trillion financing facility agreement between the Government of Pakistan (GoP) and a consortium of 18 banks, which he attended virtually from New York.
During the event, the prime minister shared that he had met with IMF Managing Director Kristalina Georgieva on Wednesday, who praised Pakistan’s economic reforms. Georgieva also expressed sympathy for the country’s flood crisis and assured that the IMF would provide significant support, acknowledging the impact on Pakistan’s economy. She confirmed the IMF’s commitment to working closely with Pakistan through this challenging period.
An IMF team is set to visit Pakistan on September 25, 2025, for the second semi-annual review of the Extended Fund Facility (EFF), which will evaluate the country’s economic performance amidst the flood-induced challenges.
Addressing the event, the prime minister highlighted the persistent issue of circular debt in Pakistan’s energy sector. He described the resolution of the circular debt as a major achievement, noting that negotiations with independent power producers (IPPs) had contributed to a comprehensive solution. He added that the next step is the privatisation of distribution companies and tackling line losses in the energy sector.
Federal Minister for Energy Awais Leghari emphasized that the circular debt had been a significant burden on the economy and the energy sector but expressed optimism that the resolution plan would strengthen the sector’s liquidity and signal fiscal discipline and reform commitment.
Finance Minister Senator Muhammad Aurangzeb, addressing the ceremony virtually, called the agreement the largest financing and restructuring transaction in Pakistan’s history, describing it as a “win-win situation.” He added that structural issues in the power sector are being addressed as part of the broader reform agenda.
The circular debt resolution plan, according to the Ministry of Finance, will not place additional burden on power consumers, as repayments will be serviced through an existing surcharge of Rs 3.23 per unit.
