Islamabad, May 26 (IANS) Pakistan and the International Monetary Fund (IMF) are expected to hold a virtual round of negotiations and talks for the upcoming fiscal budget 2025-26 later on Monday, government sources have revealed.

Both sides are expected to discuss circular debt of the gas sector and other parts of the next budget with Pakistani officials expected to present a plan for ending the gas sector’s circular debt.

During the first round of talks with the IMF delegation in Islamabad, it was demanded of the Pakistan government to provide the data of the gas sector companies. Government sources say that Pakistan is expected to produce the five-year performance of the gas companies to the IMF during the virtual talks.

The IMF has raised serious questions over the towering circular debt of the gas sector, which stands at a whopping Rs 2800 billion.

“The IMF will be briefed about the gas companies’ profit, loss data, cash flow and the balance sheet,” said a government source.

“Pakistan will also be submitting a plan to the IMF about phasing out the circular debt within the next five years,” the source added.

While there is optimism on the Pakistan side, the inconclusive first round of talks with the IMF due to various disagreements over the relief measures proposed, has raised concerns over the strict conditions of the IMF which may reflect in increased taxes on the citizens during the financial budget 2025-26.

“The IMF raised objections to government proposals, particularly on additional power subsidies to domestic consumers. It also rejected the government’s plan to reduce electricity tariffs for industrial users, and demanded timely tariff hikes during the next fiscal year,” a top official said.

While Pakistan’s Federal Board of Revenue (FBR) has shown its reluctance to increase tax targets, the government’s expenditure continues to rise, prompting the IMF to warn Islamabad that if the spending exceeds the fixed limit, then Pakistan may miss its primary balance surplus target, which is pivotal to the IMF loan programme to Pakistan.

–IANS

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