Islamabad (Commerce Desk) The total circular debt of Pakistan’s energy sector has reached Rs5.286 trillion.
According to sources, the circular debt of the gas sector stands at Rs3.611 trillion, while the electricity sector’s circular debt has been recorded at Rs1.675 trillion. Thus, the gas sector accounts for a significantly larger share of the total circular debt than the electricity sector.
According to the International Monetary Fund (IMF), Pakistan’s energy sector continues to face financial pressure, and reforms need to be accelerated to ensure financial stability.
The international financial institution has stressed timely tariff adjustments and reducing losses in the energy sector to control circular debt.
The IMF said reducing the flow of circular debt in the electricity sector remains a major challenge for Pakistan, while continuing cost-based tariff adjustments in the gas sector is also necessary.
According to the IMF, weaknesses in the energy sector pose a risk to Pakistan’s financial stability. The government has pledged to further slow the pace of increase in electricity-sector circular debt during the current fiscal year, while the reforms aim to reduce losses and make the electricity and gas sectors financially sustainable.