ISLAMABAD: Pakistan plans to borrow another 200 billion rupees ($1.44billion) to help clear power sector debt destabilizing the finances of thegovernment and private power producers, a senior official tasked withenergy reforms said.
Pakistan’s economy and society have been racked by a decade of chronicelectricity shortages which have crippled its manufacturing industries andstoked voter anger in the South Asian nation of 208 million people.
Electricity shortages have eased in the last 12 months but years ofmismanagement and funding shortfalls for subsidies have led to accumulatedpower sector payment arrears, or “circular debt”, soaring to 1.4 trillionrupees ($10.1 billion).
Independent power producers (IPPs) angry with late government payments havewarned they face a financial crisis, while economists fear rising circulardebt will further widen Pakistan’s yawning fiscal deficit, a key part ofongoing bailout talks with the International Monetary Fund.
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Pakistan earlier this month raised 200 billion rupees through an Islamicbond to ease a financial crunch in its power sector, but critics say muchmore needs to be done.
