In Pakistan, circular debt is a public debt which is a cascade of unpaid government subsidies,[1] which results in accumulation of debt on distribution companies. When this happens, the distribution companies cannot pay independent power producers who in turn, are unable to pay fuel-providing companies thus creating the debt effect as seen in the country.[2]

As of January 2021, the total circular debt of Pakistan was Rs. 2,309 billion.[3]

References

  1. ^ The Conundrum of Circular Debt. Energy Law & Policy eJournal. Social Science Research Network (SSRN). Accessed 28 January 2020.
  2. ^ "Lights out: 'Circular debt' cripples Pakistan's power sector". Al Jazeera.
  3. ^ "PTI govt adds Rs565 billion to circular debt". The Express Tribune. 15 January 2020.


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