The writer is assistant professor of economics at the Institute of Business Administration, Karachi.
THEY say the road to hell is paved with good intentions. The aphorism is particularly relevant to Pakistan where the existing economic mess is largely of our own making. Politicians promise people stuff they can’t afford. This leads to growing subsidies, rising loans and widening budget deficits. Spurts of such debt-fuelled growth gives people a temporary and false sense of prosperity. However, any operation run on unsustainable cash injections in the form of subsidies, tax breaks or outright bailouts blows up sooner or later.
A case in point is the energy sector riddled with the ever ballooning circular debt. The root cause of the circular debt (unpaid bills of over Rs2.5 trillion on the balance sheets of power sector companies) is the (any) government’s inability to make its own departments and divisions pay for the electricity that they have used (government organisations bei
Top Story
February 13, 2021
ISLAMABAD: The circular debt is set to alarmingly increase up to Rs4,936 billion by financial year 2025 with an increase of 2.04 times from the current level of Rs2,400 billion, highlights the report on Pakistan’s Power Sector Circular Debt Causes, Consequences, and Remedies prepared by Pakistan’s leading economist Sakib Sherani of Macro Economic Insights (MEI).
Sherani served as Member, Prime Minister’s Economic Advisory Council, and Principal Economic Adviser, Ministry of Finance, Government of Pakistan. The stock of circular debt is still projected by MEI to increase to over Rs3,000 billion by 2025, under the best case (strong reforms) scenario.
Top Story
February 13, 2021
ISLAMABAD: The circular debt is set to alarmingly increase up to Rs4,936 billion by financial year 2025 with an increase of 2.04 times from the current level of Rs2,400 billion, highlights the report on Pakistan’s Power Sector Circular Debt Causes, Consequences, and Remedies prepared by Pakistan’s leading economist Sakib Sherani of Macro Economic Insights (MEI).
Sherani served as Member, Prime Minister’s Economic Advisory Council, and Principal Economic Adviser, Ministry of Finance, Government of Pakistan. The stock of circular debt is still projected by MEI to increase to over Rs3,000 billion by 2025, under the best case (strong reforms) scenario.