As of June 2023, the circular debt stock has surged to Rs2.31 trillion, marking an increase of approximately Rs57 billion, or about 2.5% year-on-year compared to June 2022. This concerning trend is revealed in the latest circular debt report released by the Ministry of Energy.
However, when examining the situation on a month-on-month basis, there is a noteworthy decrease of Rs336 billion compared to May’s circular debt figure of Rs2.65 trillion.
One of the contributing factors to the debt increase is the amount payable to power producers, which saw an uptick of Rs5 billion. This rise can be attributed to the withdrawal by the Federal Board of Revenue (FBR) in April 2023. Part of this includes the disbursement of Rs21 billion to address outstanding claims from the previous year, which had been zero-rated.
Furthermore, there is an outstanding receivable amount of Rs346 billion from K-Electric (KE) as of June 2023. This substantial sum remains pending due to an ongoing subsidy dispute between K-Electric and the government.
The total liability has expanded by Rs220 billion as of June 2023. To mitigate this growing burden, the government has made a payment of Rs162 billion through its fiscal space, thereby leaving a remaining balance of Rs57 billion as circular debt. This indicates the government’s effort to manage and alleviate the circular debt crisis, although the overall debt load remains a critical issue that requires ongoing attention and resolution
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