According to the World Bank’s assessment, during the last half-decade, the debt has grown by 1241 billion rupees, with an additional 1128 billion rupees between 2019 and 2021.
The circular debt of the power industry has been increasing at a concerning rate, according to a World Bank analysis. Between 2022 and 2024, there was a significant increase of 113 billion rupees.
The total amount of circular debt in Pakistan’s electricity industry as of 2024 is 2393 billion rupees.
The World Bank underlined the necessity of changes to address the issue of circular debt.
Prior to this, the growing circular debt in Pakistan’s power industry was another source of “concerns” for the International Monetary Fund (IMF).
Authorities from Pakistan and the IMF discussed plans to raise the circular debt in the power sector by an additional 100 billion rupees during the current fiscal year.
It is anticipated that the circular debt in the power industry will exceed Rs 2,550 billion by June 2025, according to sources.
Pakistan has promised the IMF that timely tariff adjustments will be made in order to manage the circular debt.
The IMF has mandated that the electricity sector’s circular debt be limited to 2,500 billion rupees. Still, reports indicate that the joint debt control strategy with the IMF was not carried out satisfactorily even in the most recent fiscal year.
IMF requirements said that for the current fiscal year, the circular debt was to be kept under control at 2,310 billion rupees. A breach of the loan agreement may result from failure to meet this requirement.
