Pakistan, IMF remain split over gas debt resolution plan

A fresh round of virtual negotiations between Pakistan and the International Monetary Fund (IMF) has ended in deadlock, with the two sides unable to agree on a mechanism to unwind close to Rs1.7tr worth of circular debt piled up in the gas sector. At the heart of the disagreement, sources said, is a Fund demand that Islamabad stop treating unpaid dues owed to the country's two state-run gas utilities as recoverable receivables and instead record them outright as losses. Government negotiators have pushed back, and with no middle ground found, the matter has been kicked forward to another round of talks slated for September. The mechanics of the IMF's proposal would see the utilities absorb the write-down directly on their books first, with the government stepping in afterward to recapitalize the companies through fresh capital injections, according to the sources.