Pakistan’s energy sector circular debt has surged to Rs. 5.206 trillion, with the gas sector accounting for Rs. 3.442 trillion and the power sector contributing Rs. 1.764 trillion, according to the International Monetary Fund’s latest report. The IMF report stated that by early 2026, the combined circular debt of Pakistan’s electricity and gas sectors had reached Rs. 5.2 trillion, reflecting mounting financial pressures across the country’s energy system.

The IMF report stated that by early 2026, the combined circular debt of Pakistan’s electricity and gas sectors had reached Rs. 5.2 trillion, reflecting mounting financial pressures across the country’s energy system.

According to the Fund, Pakistan’s energy sector continues facing severe financial stress despite ongoing reform measures and repeated tariff adjustments.

The government has informed the IMF that it is implementing reforms aimed at rationalizing tariffs, reducing untargeted subsidies, and improving cost recovery mechanisms across the energy sector.

Under commitments made as part of the IMF program, Pakistan has assured the Fund that regular tariff adjustments will continue in both the electricity and gas sectors.

The government has also committed to gradually phasing out untargeted subsidies and converting accumulated power sector liabilities into obligations of the Central Power Purchasing Agency. The reform plan additionally includes imposing extra surcharges on electricity consumers to support repayment of the principal debt accumulated in the power sector.

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