Federal Minister for Power Awais Leghari announced on Friday that Pakistan’s long-standing circular debt crisis will be eliminated within six years, following a landmark financing agreement signed with 18 banks on concessional terms. He stressed that the arrangement places no extra financial burden on consumers.
Speaking at a press conference, the minister heavily criticized the previous government for exacerbating the debt problem. He recalled that when the PML-N government left office in 2018, circular debt stood at Rs1,100 billion, but during the PTI government, it ballooned to Rs2.28 trillion by 2022. When the current government took charge last year, the figure had already risen to about Rs2.4 trillion.
Leghari described circular debt as a “curse” for Pakistan but highlighted recent progress. He detailed savings of Rs242 billion through curbing theft, improving recoveries, and enforcing financial discipline. Another Rs175 billion was saved due to a stronger economy and reduced interest rates, while renegotiated Independent Power Producer (IPP) contracts cut costs by Rs363 billion. Together, these measures slashed the debt burden by Rs780 billion.
As of June 2025, the debt stock has been brought down to Rs1,614 billion. The government also signed a Rs1.225 trillion financing package with 18 banks, secured at KIBOR minus 0.9%, marking the first such deal in Pakistan’s history. According to Leghari, this move will lower interest costs by 3.5% to 5%.
He assured that the current surcharge of Rs3.23 per unit will be phased out within five to six years. The minister also praised ongoing governance reforms and the improved performance of Disco boards, which have reduced losses and cut the burden on industries by 38% and on more than 18 million households by 50%.
“This is the first time in Pakistan’s history that circular debt is being addressed through a structured plan, transparency, and discipline,” Leghari said, crediting Prime Minister Shehbaz Sharif’s leadership for the achievement.
Leghari Vows to End Circular Debt in Six Years with Historic Deal
