ISLAMABAD: Pakistan’s combined circular debt in the power and gas sectors has surged to Rs5.1 trillion, according to disclosures made during a meeting of the National Assembly Standing Committee on Finance.
Officials informed the committee that the total circular debt has significantly increased from Rs3.5 trillion recorded last year, highlighting growing financial pressures on the country’s energy sector and economy.
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The committee reviewed Pakistan’s economic situation and fiscal priorities for the upcoming 2026-27 budget, focusing on emerging economic risks, the performance of the IMF programme and the need for structural reforms.
During the briefing, lawmakers were told that despite gradual signs of economic recovery, Pakistan still remains on a path of what officials described as “fragile stabilisation.” The country’s GDP growth rate for the next fiscal year is projected to remain between 3.5 per cent and 4.5 per cent.
However, inflation has once again entered double digits, reaching 10.9 per cent on an annual basis in April 2026, adding to public concerns over rising living costs.
The committee was also informed that Pakistan’s total external debt currently stands at approximately $137.56 billion.
Members of the committee expressed concern over the government’s continued reliance on indirect taxes and petroleum levy collections instead of broadening the tax base. Lawmakers warned that such measures were placing additional financial burden on ordinary citizens already affected by inflation and economic uncertainty.
The chairman of the committee also voiced concern over the increasing burden of circular debt, the slow pace of reforms in state-owned enterprises and the growing socio-economic pressures caused by unemployment and poverty.
Participants stressed the need for urgent structural reforms in the energy sector to improve efficiency, reduce losses and prevent further accumulation of debt.
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The meeting also discussed the importance of strengthening fiscal discipline, improving revenue collection and ensuring sustainable economic growth ahead of the federal budget announcement.
Economic analysts say the rising circular debt remains one of Pakistan’s most significant financial challenges, affecting energy supply, investor confidence and overall economic stability.