Crucial negotiations were held between a delegation of the International Monetary Fund (IMF) and Pakistani officials regarding the power sector’s circular debt and economic reforms.

During the meeting, the IMF demanded that no new increase (zero inflow) in the circular debt of the power sector be allowed during the current fiscal year.

According to sources, the delegation was briefed that the government has prepared a 3- to 6-year plan to eliminate circular debt in the power sector, under which gradual improvements will be made.

Officials informed that following a Rs1.2 trillion deal with banks, the circular debt has now been reduced to around Rs400 billion.

The briefing further noted that starting from 2026, tariff rebasing will be conducted annually on January 1.

The sources added that levies on captive power plants and matters related to tariff rebasing were also discussed during the negotiations.

Additionally, the IMF delegation was briefed on the incentive scheme introduced to increase remittances.

It was shared that Rs100 billion will be spent on this scheme during the current fiscal year to facilitate overseas Pakistanis further.

Details related to financial aid for flood victims and damage assessments were also presented during the meeting.

Officials reaffirmed the government’s commitment to not only control circular debt through reform measures, but also to place the economy on a stable footing.