Circular Debt Package: Govt to sign Rs1.225 trillion pact with 18 banks
today
The government of Pakistan is set to sign a Rs1.225
trillion financing agreement with a consortium of 18 banks today to tackle the
power sector’s circular debt.
Prime Minister Shehbaz Sharif, currently in New York, will witness the ceremony virtually at the Prime Minister’s Office in Islamabad. Officials confirmed that all documentation for the agreement has been finalized.
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resolves circular debt with historic Rs1.275 trillion Islamic financing deal
Pakistan’s circular debt now stands at Rs1.66
trillion, down from Rs2.5 trillion. Under the agreement, the government will
have 30 days to request disbursements, with an additional three months to draw
on approved amounts.
Of the total facility, Rs659 billion will be
used to repay loans previously taken by Power Holding Limited (PHL), while the
allocation of the remaining funds — for payments to IPPs, the petroleum sector,
or subsidy adjustments — is yet to be decided.
The package, offering temporary relief, carries repayments over six years at Kibor minus 9%, underlining Pakistan’s continued reliance on domestic banks to manage systemic gaps in the energy sector.
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set to get loan of Rs1.275 trillion from banks to resolve circular debt
Key attendees include CEOs of CPPA-G, PHL, NPGCL, and major DISCOs, senior government officials, central bank representatives, and heads of international financial institutions such as the World Bank, ADB, and IMF.
Source: Business Recorder