Pakistan has discussed its proposed Rs1 trillion power subsidy plan with the International Monetary Fund during ongoing consultations on energy sector reforms. Officials informed the lender that the Power Division may require about Rs990 billion in subsidies for FY27, higher than the Rs893 billion allocated in the current fiscal year.
More than Rs500 billion of the proposed subsidy is expected to cover losses caused by electricity theft, low bill recoveries, and operational inefficiencies within the power system. IMF officials encouraged Pakistan to keep subsidy allocations under control and also raised questions regarding projections of rising circular debt in the energy sector.
Government representatives stated that higher financing costs and unresolved liabilities continue to place pressure on the power sector. Authorities added that circular debt could increase by over Rs500 billion next fiscal year, while the IMF prefers limiting the increase to around Rs300–325 billion, as discussions on financial sustainability continue.
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