ISLAMABAD, September 18: Pakistan and the International Monetary Fund (IMF) are set to hold talks next week for the fourth economic review, with discussions expected to focus on energy-sector reforms, privatisation and plans to settle circular debt in the electricity and gas sectors, according to sources.
The government is also expected to brief the IMF on reforms to electricity and gas transmission systems and measures aimed at increasing private-sector participation. A revision in the base electricity tariff is expected in January 2027, sources said.
Energy-sector reforms remain a key part of Pakistan’s programme with the IMF. In its third-review report published earlier this year, the Fund stressed timely tariff adjustments, power-sector sustainability, DISCO private-sector participation and progress towards a competitive electricity market.
Sources said the government has determined tariffs for a competitive electricity market, although the auction process has yet to begin.
Notices inviting expressions of interest have also been issued for the privatisation of the Islamabad, Faisalabad and Multan electricity distribution companies.
Local and foreign investors have shown interest in acquiring the distribution companies, according to the sources.
The government has set a target of containing power-sector circular debt at Rs1.614 trillion, while an adjustment in the base electricity tariff is expected in January 2027.
The IMF has consistently linked energy-sector sustainability with cost-recovery tariffs, reducing circular debt and structural reforms in power distribution.
Sources said another proposal under consideration would provide electricity subsidies to eligible consumers through the income support programme from next year.
However, they said moving towards full electricity cost recovery and eliminating cross-subsidies could lead to higher tariffs.
The upcoming talks will therefore cover a broad range of measures affecting Pakistan’s electricity and gas sectors, including tariff policy, circular debt, privatisation, transmission reforms and the future structure of consumer subsidies.