Fresh IMF conditions spark concern over Pakistan’s gas companies

Pakistan and the International Monetary Fund (IMF) held virtual discussions on a proposal to reduce the gas sector’s circular debt by around Rs1.7 trillion. However, both sides could not agree on the settlement plan during the meeting.

According to sources, the IMF suggested new conditions before approving the plan. It asked Pakistan to officially record the financial losses of gas companies in their accounts instead of showing the unpaid recoveries as money that is still expected to be collected.

The IMF also proposed that after these losses are recorded, the gas companies should be financially supported again through recapitalization. Sources said this step could reduce the market value of shares of gas companies, raising concerns among government officials.

Officials in the Petroleum Division are reportedly unwilling to accept the IMF’s proposed conditions because of their possible financial impact. Despite the differences, both sides are expected to continue discussions in September, and Pakistan may prepare a revised settlement plan based on the IMF’s recommendations.

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Meanwhile, another important issue remains unresolved. Negotiations between the IMF and the Tariff Policy Board on Pakistan’s new auto policy also failed to conclude. As a result, the existing auto policy is likely to continue for another year.

Sources in the Ministry of Finance said the previous auto policy expired on June 30, but a new policy could not be introduced. Officials admitted that the earlier policy was also not fully implemented.

Prime Minister Shehbaz Sharif has reportedly expressed concern over the delay in introducing the new automobile policy. Sources added that finalizing the new policy in the coming month also appears unlikely.