ISLAMABAD – The International Monetary Fund (IMF) has sought a clear plan of action from the government by Friday (today) to end the circular debt issue and reform the bleeding public sector enterprises within the current financial year in order to revive the suspended standby arrangement facility. An official source said the success of the talks hinged on the action plan that the government presented to the fund staff on Thursday and would be finalised today. During the talks, IMF officials said the government had no plan to curtail the circular debt, which had again risen due to the massive line losses and theft.
The IMF officials were of the opinion that mere power tariff hike would not revive the power sector, as numerous hikes in the past have not resolved the chronic problems of circular debt and power theft. The IMF sought benchmarks for curtailing theft and for ending circular debt within the current fiscal year, he said. The source said the circular debt had risen to Rs 230 billion. The government had created a power holding company that lifted all circular debt at the end of last fiscal year. He said the line losses, mainly theft, alone contributed Rs 125 billion to circular debt. The fund staff advised the government to focus on curtailing power theft.
The government informed IMF officials that the technical audit of the state owned generation companies (GENCOs) was complete and the World Bank and Asian Development Bank were conducting studies to improve their power generation. However, IMF demanded benchmarks for this fiscal to improve the performance of GENCOs, as they were producing expensive electricity.
