ISLAMABAD (Dunya News) – Pakistan's power sector circular debt increased to Rs1.74 trillion by the end of June 2026, exceeding the Rs1.6 trillion ceiling agreed with the International Monetary Fund (IMF).
According to sources, under the agreement with the IMF, the government had committed to a zero-inflow target, aiming to keep circular debt capped at Rs1.6 trillion. Around Rs400 billion added during the previous fiscal year was expected to be adjusted through government subsidies.
However, sources said the power sector's circular debt increased by approximately Rs480 billion during the last fiscal year. The Ministry of Finance allocated nearly Rs350 billion to offset the accumulation.
Despite the adjustment, the total stock of circular debt still increased by more than Rs130 billion. The relevant ministry is currently working on measures to absorb the excess amount.
Sources added that the government remains optimistic about bringing circular debt back to the agreed Rs1.6 trillion limit before the next economic review.