{"id":447,"date":"2026-10-03T16:47:57","date_gmt":"2026-10-03T16:47:57","guid":{"rendered":"https:\/\/goodforfree.com\/index.php\/2026\/10\/03\/federal-government-plans-rs110-billion-deduction-from-provincial-shares-imf-briefed-on-power-sector-recovery\/"},"modified":"2026-10-03T16:47:57","modified_gmt":"2026-10-03T16:47:57","slug":"federal-government-plans-rs110-billion-deduction-from-provincial-shares-imf-briefed-on-power-sector-recovery","status":"publish","type":"post","link":"https:\/\/goodforfree.com\/index.php\/2026\/10\/03\/federal-government-plans-rs110-billion-deduction-from-provincial-shares-imf-briefed-on-power-sector-recovery\/","title":{"rendered":"Federal Government Plans Rs110 Billion Deduction from Provincial Shares \u2014 IMF Briefed on Power Sector Recovery"},"content":{"rendered":"
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The federal government has disclosed plans to recover more than Rs110 billion in outstanding power sector dues by deducting the amount directly from provincial allocations under the National Finance Commission award, according to sources familiar with ongoing discussions with the International Monetary Fund.<\/p>\n

The proposal, which surfaced during recent IMF review meetings in Islamabad, involves adjusting electricity arrears owed by provincial governments from their constitutionally mandated revenue shares. Officials from the Power Division and Finance Division have reportedly agreed on a mechanism to execute the deductions, with at least Rs110 billion already reconciled and nearly Rs50 billion targeted for immediate recovery.<\/p>\n

However, the plan faces significant legal and political hurdles. Provincial governments have historically resisted such deductions, and without written consent from the provinces and formal debit authority granted to the State Bank of Pakistan, the central bank cannot legally proceed with the adjustments. When questioned, the Power Division declined to confirm whether provincial approval had been secured, redirecting inquiries to the Finance Division, which did not respond.<\/p>\n

The IMF has expressed concern that the deductions could further destabilize provincial finances, which are already under severe pressure. Provincial governments are currently required to generate Rs1.7 trillion in cash surplus and provide Rs1.036 trillion in grants to the federal government under existing fiscal arrangements. To meet these demands, provinces have already scaled back development spending, and additional deductions could force further cuts to public services and infrastructure projects.<\/p>\n

The power sector briefing to the IMF also addressed the alarming rise in circular debt, which surged by Rs61 billion in the last fiscal year to reach Rs1.675 trillion. The Power Division attributed the increase to reduced subsidy allocations in the federal budget and ongoing payment disputes with K-Electric, the privatized utility serving Karachi.<\/p>\n

IMF officials reportedly expressed frustration over the growing debt stock, noting it was becoming increasingly difficult to justify Pakistan’s fiscal position to the IMF board. The lender suggested that savings could have been used to reduce the debt burden instead of allowing it to balloon.<\/p>\n

Discussions also touched on the future of electricity pricing policy, particularly whether the government would abolish uniform tariffs following the planned privatization of state-owned distribution companies. Under the current system, consumers across the country pay the same rates regardless of whether their local utility operates efficiently or inefficiently. The government did not provide a clear answer, despite the IMF’s view that ending uniform tariffs is essential to reducing subsidy burdens.<\/p>\n

The Power Division informed the IMF that smart meters are being installed to resolve billing disputes with provincial governments, a move aimed at improving transparency and reducing disagreements over consumption and payments.<\/p>\n

The federal government previously attempted a similar deduction of over Rs6 billion per month from Khyber Pakhtunkhwa’s share under a separate cash grant arrangement, but the province refused to authorize the State Bank to make the cuts.<\/p>\n

The standoff highlights deepening tensions between federal and provincial authorities over revenue sharing and fiscal responsibilities, with provinces increasingly wary of federal encroachment on their constitutional entitlements. As Pakistan navigates its IMF program, the resolution of these disputes will be critical to maintaining both fiscal discipline and federal-provincial harmony.<\/p>\n","protected":false},"excerpt":{"rendered":"

The federal government has disclosed plans to recover more than Rs110 billion in outstanding power sector dues by deducting the amount directly from provincial allocations under the National Finance Commission award, according to sources familiar<\/p>\n","protected":false},"author":1,"featured_media":446,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[3,6,4],"class_list":["post-447","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-ai-consensus","tag-express-tribune","tag-journalist-ai"],"featured_image_url":"https:\/\/goodforfree.com\/wp-content\/uploads\/2026\/10\/federal-government-plans-rs110-billion-deduction-from-provincial-shares-imf-briefed-on-power-sector-recovery.png","read_time":"3 min read","source_name":"Goodforfree","_links":{"self":[{"href":"https:\/\/goodforfree.com\/index.php\/wp-json\/wp\/v2\/posts\/447","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodforfree.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodforfree.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodforfree.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodforfree.com\/index.php\/wp-json\/wp\/v2\/comments?post=447"}],"version-history":[{"count":0,"href":"https:\/\/goodforfree.com\/index.php\/wp-json\/wp\/v2\/posts\/447\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/goodforfree.com\/index.php\/wp-json\/wp\/v2\/media\/446"}],"wp:attachment":[{"href":"https:\/\/goodforfree.com\/index.php\/wp-json\/wp\/v2\/media?parent=447"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodforfree.com\/index.php\/wp-json\/wp\/v2\/categories?post=447"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodforfree.com\/index.php\/wp-json\/wp\/v2\/tags?post=447"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}