ISLAMABAD: The International Monetary Fund (IMF) review mission has rejected Pakistan’s revised Circular Debt Management Plan (CDMP). It has called on the Pakistan government to increase the electricity tariff in the range of Pakistani Rupees (PKR) 11-12.50 per unit to restrict the additional subsidy at PKR 335 billion for the current fiscal year.

The International Monetary Fund review mission led by Nathen Porter arrived in Islamabad on Monday and both sides will continue to hold talks to complete the pending ninth review under the $7 billion Extended Fund Facility (EFF).

The IMF has called the revised CDMP unrealistic, which is made on the basis of certain wrong assumptions. The Pakistan government will have to make changes in its policy prescription to restrict the losses of the power sector, as per news report.

The IMF and Pakistan’s Ministry of Defence will work out a gap on the fiscal front after which various additional taxation measures will be finalised through the upcoming mini-budget. The revised CDMP has called for an increase in the circular debt to the tune of Rs 952 billion for the current fiscal year against an earlier projection of Rs 1,526 billion. The government shared its revised CDMP with IMF on Wednesday.

The revised CDMP demonstrated that the government needed an additional subsidy of Rs 675 billion despite increasing the power tariff in the range of PKR 7 per unit through quarterly tariff adjustment in the first two quarters of 2023 and PKR 1.64 for the third quarter from June to August.

“The IMF has opposed the revised CDMP and asks the government to raise the tariff in the range of Rs 11 to Rs 12.50 per unit, so that the requirement of additional subsidy could be reduced to half from its existing levels of Rs 675 billion for the current fiscal year,” the news report quoted top official sources as saying.