IMF Grants Pakistan Rs1.25 Trillion Loan Amid Power Sector Reforms

ISLAMABAD: The International Monetary Fund (IMF) has granted Pakistan permission to borrow Rs1.25 trillion from local banks following successful policy negotiations between Pakistani officials and IMF representatives. This move is part of Pakistan’s strategy to address its growing fiscal challenges and manage the significant Rs2.4 trillion circular debt in the power sector.

The government has outlined a six-year roadmap to reduce this debt, with plans to use funds from bank loans and surcharges to repay Rs1.5 trillion. Additionally, negotiations with independent power producers are expected to save Pakistan Rs463 billion.

During a recent visit by an IMF delegation, Finance Minister Muhammad Aurangzeb received assurances of continued economic support from the IMF. In line with the ongoing economic reforms, the Pakistani government has committed to privatising seven state-owned entities, including Pakistan International Airlines, to fulfill the conditions of the $7 billion loan programme.

Read more:Pakistan & IMF Progress on $7B Loan Deal

However, the proposal to remove the Goods and Services Tax (GST) on electricity bills was rejected during the March 7 economic review discussions between Pakistan and the IMF. This decision marks a significant moment in Pakistan’s ongoing economic negotiations with international financial institutions.