Islamabad: Pakistan and the International Monetary Fund (IMF) have failed to reach an agreement on a plan to reduce the country's gas sector circular debt by Rs1.7 trillion, with final negotiations now expected to take place in September. According to sources, Pakistan's total gas sector circular debt has risen to approximately Rs3.3 trillion. During recent virtual discussions, both sides were unable to agree on a settlement plan aimed at reducing the debt. Sources said the IMF proposed new conditions for the settlement plan. The lender believes that the financial losses of gas companies should be fully reflected in the plan. It also suggested that receivables that are unlikely to be recovered should be recognized as losses. The IMF has recommended that, after recording the full extent of the losses, the affected gas companies should be recapitalized to restore their financial position. Officials in Pakistan's Petroleum Division have reportedly raised objections to the IMF's proposed conditions. As a result, both sides are expected to resume discussions in September to finalize a settlement plan. The final strategy for reducing the gas sector's circular debt is expected to be prepared in consultation with the IMF.