Pakistan, IMF weigh BISP route for gas, electricity subsidies

According to Mettis Link News, Pakistan and the International Monetary Fund have focused their talks on reworking energy subsidies, weighing a move away from tariff relief toward cash payments for low-income families. Both sides are considering the Benazir Income Support Programme (BISP) as a channel for gas subsidies, with the aim of slowing the growth of circular debt. The Fund has expressed concern about how quickly gas-sector circular debt, now close to Rs3.6tr, is building up.

The lender wants aid directed to those in need, but local officials cautioned that the gas segment does not yet have adequate information and well-defined ownership for a fully targeted model. Of the Rs3.6tr stock, about Rs1.8tr is principal, and the rest consists of interest and late-payment surcharges. Islamabad has argued that discounted tariffs for protected users have left regulated gas prices below the real cost of supply, and officials said the two sides also discussed trimming cross-subsidies.

On electricity, the IMF sought an explanation for a Rs65-70bn rise in circular debt, which stood at about Rs1.675tr at end-June 2026. Officials linked part of the increase to a shortfall of roughly Rs95bn in tariff differential subsidy releases and a delayed payment of about Rs200bn by K-Electric. Further talks are planned on replacing subsidised power tariffs with BISP transfers, with the mechanics still to be settled.