The Fund earlier on February 12, 2024 refused to support the tariff rationalisation plan     A general view of the high voltage lines during a nationwide power outage in Rawalpindi on January 23, 2023. — AFP

ISLAMABAD: The new government will re-engage the IMF over the caretaker regime’s plans of tariff rationalisation and circular debt (CD) stock management, which the Fund had earlier rejected. The authorities in Islamabad reckon that without the approval of the said two plans, the country’s economy cannot grow, a senior official of the Energy Ministry told The News.

“We have communicated to the Fund that the functionaries in the Power Division are ready to respond to the objections on the plans to settle down Rs1.27 trillion of energy sector circular debt and tariff rationalisation plan under which tariff of the industrial sector will be brought to 9 cents per unit from the existing 14 cents to stimulate the economy by doing away with Rs222 billion cross-subsidy the industry is giving to domestic sector.”

“The government will try to find a middle way out to overcome the said two issues that have taken the economy hostage. The government has decided to re-engage with the IMF on tariff rationalisation and circular debt stock management.”

The Fund earlier on February 12, 2024 refused to support the tariff rationalisation plan arguing the bulk of the proposal is substantively similar to the proposed winter package of November 2023, which it did not support and IMF does not see it as the appropriate response to energy sector’s problems.