Pakistan’s Energy Sector Circular Debt Reaches Rs5.2 Trillion: IMF Report

ISLAMABAD: Pakistan’s circular debt in the energy sector has surged to Rs5.206 trillion, according to a latest report released by the International Monetary Fund (IMF).

The report stated that the gas sector accounts for Rs3.442 trillion of the total circular debt, while the power sector’s share stands at Rs1.764 trillion by early 2026.

According to the IMF, Pakistan’s energy sector continues to face severe financial pressure, prompting the government to implement reforms in tariffs and rationalize the subsidy system.

Under the IMF program, the federal government has assured the lender that it will continue regular tariff adjustments and gradually phase out untargeted subsidies.

The report further noted that the government plans to convert accumulated debt in the electricity sector into liabilities of the Central Power Purchasing Agency (CPPA). Measures also include imposing additional surcharges on electricity consumers to ensure repayment of the principal debt.

Economic experts warn that the growing circular debt remains one of the biggest challenges for Pakistan’s economy and energy sector sustainability.