ISLAMABAD: The pledge for the Cabinet to approve an updated Circular Debt Management Plan (CDMP) by end-July 2023 as stipulated in the Memorandum of Economic and Financial Policies section of the Stand-by Arrangement (SBA) documents uploaded on the International Monetary Fund website on 12 July 2023 has yet to be met.
The updated CDMP envisaged clearance of circular debt stock payments of Rs 392 billion through PHPL principal settlement (Rs 82 billion), payments to GPPs and CPEC IPPs (Rs 310 billion) and a Rs 976 billion (0.9 percent of GDP) budget subsidy to address urgent liquidity needs in fiscal year 2024 (after revenue collection) by covering a slight decrease from the projected fiscal year 2023 financial gap.
The Finance Division disbursed Rs 601 billion as part of its pledge for clearance of dues to IPPs (including CPEC) and GPPs and has sought expenditure details from the Power Division for this amount reported in Business Recorder on 1 August 2023. An official informed this correspondent on condition of anonymity that the Ministry of Energy and Finance had shared the CDMP with the Fund and there was agreement that the price of electricity will be raised to reduce the circular debt.
Copyright Business Recorder, 2023