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The IMF has praised Pakistan’s handling of the oil crisis without major supply disruptions or an additional budgetary burden. The Fund has also urged the government to speed up work on targeted gas subsidies and rising circular debt.
Initial discussions focused on shifting gas subsidies away from consumer tariffs. The proposed system would provide direct cash support through the Benazir Income Support Programme (BISP).
However, officials told the IMF that the gas sector still faces major data and ownership problems. These issues make it difficult to identify households below the poverty line.
The IMF has continued to support targeted subsidies for vulnerable consumers. It has also called for further work on a practical mechanism.
The government has considered a uniform gas tariff based on the average prescribed price calculated by the Oil and Gas Regulatory Authority.
That price stands at around Rs1,700 per million British thermal units (mmBtu).
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The Petroleum Division has supported uniform gas rates. Officials say the move could help recover supply costs and reduce cross-subsidies.
The two gas utilities face supply costs of about Rs1,700 to Rs1,750 per mmBtu.
The government also wants to reduce the accumulation of gas-sector circular debt.
Gas-sector circular debt has climbed sharply.
According to the latest reporting, the total has reached about Rs3.6 trillion. The amount includes around Rs1.8 trillion in principal payables and a similar amount in accumulated interest and late-payment surcharges.
The IMF’s April 2026 review reported gas-sector circular debt at Rs3.4 trillion at the end of December 2025. The Fund said late-payment surcharges had contributed to the increase.
The government has also considered increasing the petroleum levy by a few rupees. The proposal would help finance part of the gas-sector debt.
However, the proposal has not secured approval at relevant government forums.
Documentation remains another major obstacle.
Many consumers do not update gas-meter records after changing their names or property ownership. Some households avoid the process because it can involve new security deposits and other formalities.
This makes it harder for officials to identify low-income households through existing meter records.
The problem also affects commercial properties. Ownership records can remain unchanged even after businesses change hands.
Officials said the power sector has more developed consumer records. That sector also has a much larger customer base.
The IMF also acknowledged Pakistan’s management of petroleum prices during the regional crisis.
The Fund noted that Pakistan avoided major fuel shortages and did not add a significant burden to the national budget. Other countries in the region faced supply disruptions, higher fiscal costs or both, according to officials cited in the report.
The IMF has stressed that energy prices should broadly reflect costs while governments protect vulnerable households through targeted support.
The IMF initially questioned an increase in power-sector circular debt.
Officials later explained that the increase resulted partly from lower-than-expected disbursements of tariff differential subsidies by the Ministry of Finance.
The IMF also recognised improvements in power-sector recoveries and loss reduction. Its latest review said stronger operational performance helped Pakistan meet its power circular-debt targets.
The government also attributed part of the debt position to delayed payments involving K-Electric.
Pakistan and the IMF are expected to discuss a mechanism for direct cash support to poor electricity consumers.
The proposed approach would move away from broad tariff subsidies. Instead, eligible households would receive assistance through BISP.
The IMF has previously supported replacing broad energy subsidies with targeted support for low-income consumers. Its programme documents also call for protecting vulnerable households while maintaining cost-recovery energy tariffs.
[…] IMF Pakistan urged to speed up gas subsidy reforms amid rising circular debt […]