Finance:Circular debt
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Short description: Power Companies Public Debt in Pakistan
In Pakistan, circular debt is a public debt that is a cascade of unpaid government subsidies,[1] which results in the accumulation of debt on distribution companies. When this happens, the distribution companies cannot pay independent power producers, who in turn are unable to pay fuel-providing companies, thus creating the debt effect as seen in the country.[2]
Circular debt started accumulating in Pakistan from 2006. While successive governments have attempted to reduce it burdens via a series of regular payments, they have been unable to control the inflow of new debt.[3]
As of July 2024, the total circular debt of Pakistan was Template:PKR.[4] As of 30 June 2025, it stood at Rs. 1.6 trillion.[5]
References
- ↑ Tauhidi, Amna; Chohan, Usman W. (2020-01-29). "The Conundrum of Circular Debt". CASS Working Papers on Economics & National Affairs. doi:10.2139/ssrn.3513225. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3513225.
- ↑ Hashim, Asad. "Lights out: ‘Circular debt’ cripples Pakistan’s power sector" (in en). https://www.aljazeera.com/economy/2019/5/24/lights-out-circular-debt-cripples-pakistans-power-sector.
- ↑ Kiani, Khaleeq (2025-09-06). "Weak reforms fuel Pakistan’s energy black hole" (in en). https://www.dawn.com/news/1940070.
- ↑ Rana, Shahbaz (2024-01-16). "Circular debt reaches Rs5.73tr" (in en). https://tribune.com.pk/story/2453386/circular-debt-reaches-rs573tr.
- ↑ Ghumman, Mushtaq (2025-07-31). "Power sector’s circular debt hits Rs1.6trn mark: CPPA-G" (in en). https://www.brecorder.com/news/40375486.
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