ISLAMABAD: Prime Minister Shehbaz Sharif on Friday said it would still take at least a “week to ten days” to finalize a staff-level agreement with the International Monetary Fund (IMF) for the revival of a stalled $7 billion bailout program.
Pakistan is desperately struggling to convince the IMF to release the next tranche of $1.1 billion after its forex reserves hit a critically low level which is barely enough to cover three weeks of controlled imports.
The country is also dealing with spiraling inflation and rapid depreciation of its national currency while trying to keep the economy afloat.
Pakistan signed the IMF deal in 2019, though it was stalled last year after the government tried to negotiate some of its conditions while trying to provide financial relief to people.
“The agreement with the IMF will be finalized, but it will still take a week or ten days,” the prime minister said while addressing the apex committee meeting in Islamabad.
Sharif also thanked “a very friendly nation,” without specifying its names, for providing generous financial assistance, saying: “We were all thinking that they would wait for the IMF agreement to finalize before playing their part [in helping Pakistan], but a few days ago, that allied nation conveyed to us that ‘we are giving you [this financial assistance] straight away.’ These things can never be forgotten.”
The PM added the said country had made “many such sincere contributions to Pakistan in the past as well.”
Pakistan has sought financial assistance from Saudi Arabia, the United Arab Emirates and China to avert a default. The country’s official foreign currency reserves have dwindled to $3.2 billion in the face of increasing debt repayments and a reduction in remittance inflows.
An IMF delegation visited Islamabad from January 31 to February 9 to discuss the revival of the program, but it departed the country without signing the staff-level-agreement.
Fulfilling some prior actions as required by the IMF, the country had to jack up the prices of electricity, natural gas and petroleum products, besides imposing additional taxes of Rs170 billion by introducing a finance bill.
“We were left with no option but to approve the tough [IMF] conditions because the state of Pakistan comes first,” the prime minister said while admitting the country was facing major economic challenges.
Pakistan PM says IMF pact may still take a ‘week to ten days’
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Pakistan PM says IMF pact may still take a ‘week to ten days’
- The PM thanks a ‘friendly nation’ for providing financial assistance before completion of the IMF deal
- Pakistan is striving for the revival of a $7 billion IMF bailout package to avert a looming debt default
Pakistan drops 8,000 MW power procurement, claims $17 billion savings amid IMF-driven reforms
- Government says decision taken “on merit” as it seeks to cut losses, circular debt, ease consumer pressure
- Power minister says losses fell from $2.1 billion to $1.4 billion, circular debt dropped by $2.8 billion
ISLAMABAD: Pakistan has abandoned plans to procure around 8,000 megawatts of expensive electricity, the power minister said on Sunday, adding that the decision was taken “purely on merit” and would save about $17 billion.
The power sector has long been a major source of Pakistan’s fiscal stress, driven by surplus generation capacity, costly contracts and mounting circular debt. Reforming electricity pricing, reducing losses and limiting new liabilities are central conditions under an ongoing $7 billion IMF program approved in 2024.
Pakistan has historically contracted more power generation than it consumes, forcing the government to make large capacity payments even for unused electricity. These obligations have contributed to rising tariffs, budgetary pressure and repeated IMF bailouts over the past two decades.
“The government has abandoned the procurement of around 8000 megawatts of expensive electricity purely on merit, which will likely to save 17 billion dollars,” Power Minister Sardar Awais Ahmed Khan Leghari said while addressing a news conference in Islamabad, according to state broadcaster Radio Pakistan.
He said the federal government was also absorbing losses incurred by power distribution companies rather than passing them on to consumers.
The minister said the government’s reform drive was already showing results, with losses reduced from Rs586 billion ($2.1 billion) to Rs393 billion ($1.4 billion), while circular debt declined by Rs780 billion ($2.8 billion) last year. Recoveries, he added, had improved by Rs183 billion ($660 million).
Leghari said electricity tariffs had been reduced by 20 percent at the national level over the past two years and expressed confidence that prices would be aligned with international levels within the next 18 months.
Power sector reform has been one of the most politically sensitive elements of Pakistan’s IMF-backed adjustment program, with higher tariffs and tighter enforcement weighing on households and industry. The government says cutting losses, improving recoveries and avoiding costly new capacity are essential to stabilizing public finances and restoring investor confidence.
