Challenging circular debt monster

Moving with ‘Shehbaz Speed’, the government approved a Circular Debt Management Plan (CDMP) finalised in consultation with multilateral lenders hours after the International Monetary Fund (IMF) released an end-of-mission statement. At the outset, it took care of the backlog of pending tariff increases on the monthly, quarterly and permanent national average rate of electricity along with a future roadmap covering almost Rs1 trillion (precisely estimated at Rs952 billion) for the current fiscal year. Other prior actions, including Rs170bn worth of mini-budget involving revenue measures, increase in natural gas tariff, and monetary adjustments, are to follow almost at the same pace. The most important factor of the recent dialogue between the IMF and the government team has been the trust deficit on the back of repeated violations of committed policy actions. These were not simple slippages against targets that could have been condoned with waivers. The credibility gap required upfront implementation of decisions. No mercy.