Government allocates less power subsidy in FY26

The government plans to allocate Rs 1.079 trillion for power sector subsidies in the 2025-26 fiscal year, aiming to reduce the fiscal deficit. This allocation, finalized after discussions with the IMF, represents a decrease from the previous year's Rs 1.190 trillion. The Finance Ministry is emphasizing efficient subsidy allocation and performance-based budgeting. The Power Division requested an advance subsidy, which was denied, and is expected to adhere to strict budget guidelines. The government is also considering an additional Rs 50 billion for circular debt management.