In what officials are calling a landmark achievement, the government on Wednesday signed a Rs1.225 trillion agreement with 18 commercial banks to address the country’s mounting circular debt.
The deal was finalized at the Prime Minister House in Islamabad, marking one of the largest financial restructuring efforts in Pakistan’s history.
Under the deal, banks have restructured loans worth Rs659.6 billion, while an additional Rs565.4 billion in fresh financing has been allocated to ensure timely payments to power producers.
The government has also issued sovereign guarantees of Rs660 billion, effectively integrating the new funds into the national economy.
No extra burden on consumers
Officials clarified that the existing Rs3.23 per unit surcharge will be used to repay these loans. They stressed that this arrangement will not impose any additional financial burden on electricity consumers.
Banks have extended these facilities at concessional interest rates, with financing set at KIBOR minus 90 basis points.
Chairman of the Pakistan Banks’ Association (PBA), Zafar Masood, hailed the agreement as more than just a financial transaction.
“This agreement is not just numbers, it is a symbol of the country’s construction and development,” he said. He added that the model could serve as an example for tackling other structural challenges in the future.
