Despite a rise in electricity rates, the circular debt is expected to rise by another Rs545 billion by March of next year since foreign loans linked to the ostensible power sector reforms are only confined to price increases and neglect other crucial issues.
The Ministry of Finance and the Ministry of Energy on Saturday reviewed financial status of the power sector, including the implementation of conditions set by the IMF and the World Bank.
According to Express Tribune, the flow might now expand by Rs545 billion, a departure of around 41% in a month, from a month-old projection of a Rs386 billion rise in circular debt by March 2024.
The new projections are not in line with the indicative targets given in the IMF report released last month.
At this stage, the government has kept the total increase in circular debt unchanged at Rs392 billion by June 2024, a calculation that the IMF will scrutinise at the time of first review of the $3 billion programme in November this year, the report said.
Against an earlier plan of reduction of Rs155 billion in circular debt by September this year, the Power Division has now estimated an increase of Rs292 billion in the first quarter.
The report said that the Rs392 billion increase in circular debt would be adjusted against the reduction in the previous debt stock through subsidies aimed at keeping the total circular debt at Rs2.310 trillion by June next year.
