Pakistan is likely to miss the circular debt reduction target which the Pakistan government has committed to the International Monetary Fund (IMF) and the World Bank in exchange for loans, reported Dawn. 

According to the power division in the country, meeting the target of the two-year circular debt management plan would be impossible because of unrealistic subsidy allocations. 

Under the plan committed with the IMF, the power sector was to get an additional financial injection of PKR 2.650 trillion in two years (i.e. fiscal year 2021-22 and FY2022-23). The target included PKR 1.060 trillion revenue generation through various tariff adjustments and rebasing and by the government (40pc contribution), followed by PKR 850 billion worth of governance, efficiency, and recovery efforts of the power division (32pc) and PKR 740 billion by the finance division (28pc) through realistic allocation and timely payment of subsidies.

As part of this, the finance division committed PKR 281 billion injections in the next fiscal year and PKR 155 billion in FY2022-23. 

However, the power division objected that the allocations were unrealistic and would result in increasing the circular debt. (SAM)