IMF rejects Pakistan's revised circular debt management plan

The International Monetary Fund, IMF, has rejected Pakistan government's circular debt management plan. During talks on a potential bail out, it asked the Pakistani authorities to raise the electricity tariff  in the range of Pakistani Rupees (PKR) 11-12.50 per unit to restrict the additional subsidy at PKR 335 billion for the current fiscal year to restrict the losses of the cash-bleeding power sector. Circular debt occurs when one entity facing problems with its cash inflows does not make payments to its suppliers and creditors, according to The News International. The IMF has called the revised CDMP "unrealistic", which is made on the basis of certain wrong assumptions. The Pakistan government will have to make changes in its policy prescription to restrict the losses of the power sector, as per The News International report. The IMF delegation headed by Nathan Porter is in Islamabad for discussing the ninth review of a 7 billion dollar loan programme. Meanwhile, Pakistan Prime Minister Shehbaz Sharif has said, the IMF was giving Islamabad a tough time on the bailout. Pakistan’s forex reserves have dropped to critically low levels which can cover merely 18 days of imports. Inflation has risen to a 48-year-high in Pakistan and citizens are struggling to afford basic food items and amenities.