IMF Approves Plan to Clear Pakistan's $12.9 Billion Gas Debt

The government of Pakistan is set to present an IMF-approved three-year plan to clear its gas sector circular debt, which has ballooned to a staggering Rs3.6 trillion ($12.9 billion). The proposed strategy aims to generate around Rs840 billion through dividends from gas companies and another Rs270 billion from the petroleum levy.

The government is also considering a Rs310 billion reduction by postponing additional LNG cargoes from Qatar, as well as recovering Rs15 billion through take-or-pay arrangements in the power sector. Additionally, officials expect to recover Rs60 billion through the complete recovery of LNG-related costs.

However, experts warn that recovering the full cost could push gas prices higher for consumers, adding to inflationary pressures at a time when households already face rising living costs. The government must balance debt reduction with the potential impact on consumers.