KARACHI: Pakistan’s top economic body this week approved a grant of $713 million to ease the power sector’s cash flow constraints, the Finance Division said in a statement, as Islamabad looks to reform its priority sectors. 

The development took place as Finance Minister Muhammad Aurangzeb chaired a meeting of the Economic Coordination Committee (ECC) to approve grants for various projects and review the overall economic situation of the country. 

“[ECC approved] another Technical Supplementary Grant amounting to Rs200 billion ($713 million) under the head of Government of Pakistan investment in DISCOs’ equity to address cash flow constraints in the power sector,” the Finance Division said on Thursday. 

DISCOs, which handle billing, recoveries and grid maintenance, have long suffered from corruption and political interference. 

Pakistan has attempted to privatize its loss-making state-owned enterprises to raise funds and reform them as envisaged under a $7 billion International Monetary Fund (IMF) program secured last year. 

Prime Minister Shehbaz Sharif’s government plans to privatize three DISCOs, the Islamabad Electric Supply Company (IESCO), Faisalabad Electric Supply Company (FESCO) and Gujranwala Electric Power Company (GEPCO) in the months ahead. 

The Pakistani government, which owns or controls much of the power infrastructure, is grappling with a ballooning “circular debt,” or unpaid bills and subsidies, that has choked the power sector and weighed on the economy.

The liquidity crunch has disrupted supply, discouraged investment and added to fiscal pressure, making it a key focus under Pakistan’s IMF program.

The ECC also approved, on the interior ministry’s proposal, a provision of Rs 4.775 billion [$17.19 million] as payment to 945 families of “missing persons” as identified by the Commission of Inquiry on Enforced Disappearances. 

“The disbursement will be made under the supervision of the Commission in accordance with approved procedures,” it added. 

Taking stock of the economic situation, the ECC noted that cumulative inflation for the period July–November averaged 5 percent, which it said was “significantly lower” than the 7.9 percent figure recorded during the corresponding period of the previous year. 

It attributed this improvement to prudent fiscal management, effective price stabilization measures and close market monitoring by the government.