IMF urges Pakistan to speed up targeted gas subsidy preparations — Dawn
The International Monetary Fund positively assessed Pakistan’s actions during the oil crisis amid the six-month conflict between the United States and Iran, but urged the authorities to speed up preparations for targeted gas subsidies and mechanisms to manage the sector’s growing debt. As Dawn reports, the fund noted that the country managed to avoid fuel shortages and an additional burden on the budget.
Problems with targeted payments
Pakistan is considering replacing subsidized gas tariffs with direct payments to low-income households through the Benazir Income Support Programme. At the same time, the publication’s sources said that the gas sector is not yet ready for such a mechanism due to problems with data, as well as identifying meter and premises owners.
For this reason, introducing a uniform tariff tied to the average determined gas price of about 1,700 rupees per million British thermal units is considered premature. The government’s petroleum division supports tariff unification to cover the actual costs of the two gas companies, reduce cross-subsidization by industry, and curb the sector’s growing debt.
According to the publication, the gas sector’s debt has reached about 3.6 trillion Pakistani rupees. Around 1.8 trillion rupees are principal liabilities, while nearly the same amount consists of accrued interest and late-payment penalties. IMF representatives, according to sources, insist on further refining the mechanism for targeted consumer support.
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Assessment of the electricity sector
The IMF also recognized improvements in Pakistan’s electricity sector performance, particularly in payment collection and loss reduction. Initially, the fund raised concerns over an increase of 65–70 billion rupees in its circular debt, which stood at 1.675 trillion rupees at the end of June 2026.
At the same time, the fund acknowledged that the sector exceeded its performance targets, while the debt increase was linked to about 95 billion rupees in unpaid Finance Ministry payments under the tariff differential subsidy. The debt could have declined even further if K-Electric had paid about 200 billion rupees on time, a payment it is delaying due to a court dispute.
Next week, Pakistani authorities and the IMF are expected to finalize practical plans for direct cash assistance to low-income electricity consumers through the Benazir Income Support Programme instead of subsidized tariffs.
