The federal government has informed the International Monetary Fund (IMF) that the power sector’s circular debt is projected to increase by Rs. 100 billion during the current fiscal year.
By June 2025, the total circular debt is expected to surpass Rs. 2.55 trillion.
Current figures show that the power sector’s circular debt has already reached Rs. 2.4 trillion. The IMF has expressed concern over the management of this debt and has urged the government to take immediate action to address the situation. One of the IMF’s key demands is that the circular debt must not exceed Rs. 2.5 trillion.
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Despite Pakistan’s commitments to the IMF, including promises of timely tariff adjustments to control the debt, the issue remains unresolved. The government’s failure last year to meet the debt reduction targets according to the agreed plan has further exacerbated the problem.
Sources report that the IMF has emphasized that Pakistan must keep the circular debt within the agreed limit of Rs. 2.31 trillion for the current financial year. Failure to do so would violate the terms of the loan agreement and could affect future negotiations regarding financial commitments.
