The government of Pakistan has decided to release more than 50 billion rupees in subsidies for the power sector.
According to reports, Rs159 billion has already been released to the power sector in the current financial year, but now more than Rs50 billion in subsidies are in the pipeline.
Govt sources say that in the first quarter, Rs128 billion were released for power sector subsidies, and in the second quarter, Rs31 billion have been released so far. After an additional Rs50 billion, the total released subsidy will exceed Rs209 billion.
According to sources, the flow of circular debt is much lower than the target set by the IMF by December.
According to the IMF’s target for December 2024, the flow of circular debt in the power sector is to be kept below Rs461 billion, while by December 19, 2024, the target of circular debt has reached only Rs70 billion, which is much lower than the target.
Government sources have expressed hope that as a result of reducing losses and increasing efficiency, the IMF’s target for circular debt in the power sector will be easily achieved.
Back in October 2024, the World Bank revealed that the power sector subsidies in Pakistan have increased by a staggering 400% in the last five years, putting a major burden on the federal government’s finances.
According to the World Bank report, the growing number of protected consumers had contributed to the surge in subsidy burden, with 94% of domestic consumers benefiting from the budgetary subsidy in 2024.
