ISLAMABAD: Pakistan and the International Monetary Fund (IMF) have failed to reach an agreement on a settlement plan for the country’s gas sector circular debt after the IMF proposed new conditions during virtual negotiations, according to official sources.
Sources said discussions focused on a settlement plan for Pakistan’s total gas sector circular debt of approximately Rs3.3 trillion, including proposals aimed at reducing nearly Rs1.7 trillion of outstanding liabilities. However, no consensus was reached.
According to the sources, the IMF has proposed that unrecovered receivables of state-owned gas companies should be recognized as financial losses instead of outstanding receivables.
The Fund also recommended that the government recapitalize the two state-owned gas utilities after recording these losses.
Officials from Pakistan’s Petroleum Division are reportedly unwilling to accept these conditions, arguing that implementing the proposal could significantly reduce the market value of the gas companies’ shares and weaken their financial position.
As no final agreement was reached during the virtual talks, the matter has been deferred until September, when both sides are expected to resume negotiations on the gas sector circular debt settlement plan.
Sources added that the revised settlement plan is likely to incorporate a greater number of the IMF’s recommendations during the next round of discussions.