Pakistan and the IMF remain divided over accounting treatment of gas sector losses, delaying negotiations on a major circular debt settlement plan until September.
Pakistan’s efforts to resolve the country’s mounting gas sector circular debt have encountered another hurdle after the International Monetary Fund (IMF) proposed new financial conditions that have yet to gain government approval. As a result, negotiations on the settlement plan have been pushed back until September.
According to official sources, the IMF has asked the government to formally record the financial losses of both state-owned gas companies in their accounts. The lender also wants unrecoverable receivables to be recognized as losses, bringing the companies’ financial statements in line with international accounting standards.
The IMF has further proposed that, after recognizing these losses, the government should recapitalize the gas companies to restore their financial strength and improve their balance sheets.
However, officials in Pakistan’s Petroleum Division have expressed concerns that recording such losses could significantly reduce the value of the companies’ shares and weaken investor confidence. Because of these concerns, authorities have not yet agreed to the IMF’s proposed framework.
Sources said Pakistan’s total gas sector circular debt has climbed to nearly Rs3.3 trillion. Under the settlement plan currently under discussion, the government aims to address approximately Rs1.7 trillion of that amount through a structured financial mechanism.
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