Pakistan Signs Rs1.22 Trillion Deal with Banks to Restructure Circular Debt
ISLAMABAD: The Pakistan government signed a landmark Rs1.22 trillion agreement with banks to address mounting circular debt. The signing ceremony took place at the Prime Minister House, making it one of the largest financial restructuring efforts in Pakistan’s history.
Breakdown of the Financial Agreement
Under the restructuring deal, banks have restructured loans worth Rs659.6 billion. Additionally, they have allocated Rs565.4 billion in fresh financing. These funds will ensure timely payments to independent power producers and stabilize the energy sector.
To support this arrangement, the government issued sovereign guarantees amounting to Rs660 billion. As a result, the newly injected funds will be securely integrated into the national economy.
No Additional Burden on Consumers: Pakistan Signs Rs1.22 Trillion Deal with Banks
Officials clarified that the loan repayments will be made through the existing Rs3.23 per unit surcharge. Therefore, this financial restructuring will not impose any extra burden on electricity consumers.
Banks have also extended these facilities at concessional interest rates. Financing has been set at KIBOR minus 90 basis points, offering significant relief to the government.
Banking Sector’s Perspective
Zafar Masood, Chairman of the Pakistan Banks’ Association (PBA), praised the agreement as a historic milestone. He stressed that the arrangement was more than just a financial transaction.
“This agreement is not just numbers, it is a symbol of the country’s construction and development,” Masood stated. He further emphasized that this model could guide solutions for other structural economic challenges in the future.
Conclusion
The Rs1.225 trillion debt restructuring deal demonstrates Pakistan’s commitment to stabilizing its power sector and reducing financial pressure. With sovereign guarantees and concessional financing, the government aims to improve liquidity while protecting consumers from additional costs. This agreement could mark a turning point in the country’s broader economic reforms.
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