Circular debts rose to alarming level of Rs4.1 billion: report

The circular debts of Pakistan’s energy sector soared to an alarming level of Rs4,177 billion with the country’s economic situation getting worse even than before.

The documents revealed that Pakistan’s energy sector is running completely on credit, according to ARY News, adding that the circular debts in the energy sector are also swelling as the government is unable to pay dues to independent power producers (IPPs).

The energy sector’s circular debt is increasing by Rs129 billion yearly.

The circular debt of the electricity sector reached Rs2,277 billion, while Pakistan State Oil’s (PSO) debt has crossed Rs600 billion. The country’s national oil company has sought Rs80 billion from the finance ministry to save its letter of credit from defaulting.

Similarly, the circular debt of the gas sector has reached Rs1,400 billion. The sources feard that the energy supply chain might get affected due to a massive rise in circular debt.

‘$23b debt’

The State Bank of Pakistan (SBP) Governor Jameel Ahmed has said that the country would need to make a $23 billion in debt repayment during the rest of this fiscal year (FY23).

In a move to soothe the financial market amid growing fears of default, State Bank of Pakistan Governor Jameel Ahmed has said the debt repayment situation is completely under control and all the external payment obligations will be met in time.

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While advising analysts to correct their views about debt repayments, Mr Jameel expressed full confidence that Pakistan will not default.

In a podcast interview with SBP Chief Spokesman Abid Qamar on Thursday, Mr Jameel said at the outset of the current fiscal year we planned Pakistan would need $33 billion in financing during FY23. “With a projected $10bn current account deficit the country would need to repay $23bn,” Ahmed said.

Out of this, we have already paid $6bn and $4bn was bilateral loans which were agreed upon for rollover. “Now we have to pay $13bn during the rest of this fiscal year,” he said.

Moreover, out of this $13bn, the government and government-related loans are $8.3bn. We have full confidence that this $8.3bn will also be rolled over.

The rest of $4.7bn remains to be paid which included $1.1bn commercial banks loans. Out of this $4.7bn, the multilateral loans are $3.5bn. These are to be repaid.

On the question of import-related restrictions, he said that initially only 15pc of all imports came under administrative measures, while there were no curbs on the rest. It has been further reviewed after consultations with the trade and industry. Currently, over 90pc imports are without restrictions, he said.

He also made it clear that the import of oil and raw material for medicines have no restrictions. He said all backlogs regarding the imports have been cleared till the end of October. He said small L/Cs up to $50000 were cleared while it has been increased to $100000.

Talking about restrictions on the import of machinery, he said those who have achieved 75pc completion, have been allowed to import the rest 25pc of machinery.

He said administrative measures to put restrictions on some imports will be removed gradually.