Pakistan economic body approves $2.3 billion for circular debt financing

Pakistan economic body approves $2.3 billion for circular debt financing
This file photo, taken on January 24, 2023, shows a power transmission tower in Karachi. (REUTERS/File)
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Pakistan economic body approves $2.3 billion for circular debt financing

Pakistan economic body approves $2.3 billion for circular debt financing
  • Circular debt is an ever-growing chain of unpaid bills within Pakistan’s power and gas sector
  • Reducing this debt has been a key requirement of the IMF under Pakistan’s $7 billion program

KARACHI: The Economic Coordination Committee (ECC) on Friday approved the issuance of a government guarantee of over Rs659 billion ($2.3 billion) for circular debt financing of Rs1.225 trillion (4.3 billion), the finance ministry said.

The decision was made at an ECC meeting, presided over by Finance Minister Muhammad Aurangzeb, to review proposals submitted by various ministries and departments, including a Power Division summary seeking the guarantee.

Circular debt is an ever-growing chain of unpaid bills within Pakistan’s power and gas sector where one entity’s arrears cascade to the next. It has for years strained the economy through debt-servicing.

“The guarantee is intended for the settlement of Power Holding Limited’s debt and overdue payments to Independent Power Producers,” the finance ministry said in a statement.

“The ECC also authorized the Finance Division to issue a Letter of Comfort accordingly. Power Division was directed to report back to ECC on the timeframe for the closure of PHL following the settlement of debt issue.”

Pakistan, which relies heavily on domestic and external loans to repay its mounting obligations, has been taking measures to reduce this circular debt, a key condition of its $7 billion International Monetary Fund (IMF) program.

In June, Pakistan signed term sheets with 18 commercial banks for a 1.275 trillion Pakistani rupees ($4.50 billion) Islamic finance facility to help pay down mounting debt in its power sector, according to officials.

In its meeting on Friday, the ECC discussed and agreed on a framework regarding rationalization of tariffs and payment adjustments for nuclear power plants, government-owned power plants, and gas companies.

The committee also endorsed a phased, data-driven approach to ensure stability in remittance inflows, which rose by 11.9 percent month-on-month in October 2025 to $3.42 billion, and to avoid any abrupt disruption that could adversely impact the economy.


Pakistan accuses India of twisting Trump’s remarks on nuclear testing

Pakistan accuses India of twisting Trump’s remarks on nuclear testing
Updated 08 November 2025

Pakistan accuses India of twisting Trump’s remarks on nuclear testing

Pakistan accuses India of twisting Trump’s remarks on nuclear testing
  • Donald Trump named Pakistan among countries he claimed were testing nuclear weapons
  • Foreign office questions India’s nuclear safety, cites incidents of theft of radioactive material

ISLAMABAD: Pakistan’s Foreign Office spokesperson Tahir Andrabi on Friday criticized India of “distorting” US President Donald Trump’s remarks on nuclear testing, saying New Delhi’s record on nuclear safety was “deeply concerning” amid incidents of illicit trafficking and theft of nuclear material.

His statement came after India hit out at Pakistan over Trump’s claim that Islamabad had been testing nuclear weapons, alongside Russia, China and North Korea, while arguing the US needed to resume testing.

Pakistan denied the assertion while saying in a media clarification that it “was not the first to carry out nuclear tests and will not be the first to resume nuclear tests.”

Commenting on Trump’s claim, however, India’s Ministry of External Affairs said Pakistan had a history of “clandestine and illegal nuclear activities” including smuggling, export control violations and secret partnerships leading to proliferation.

“India’s record on nuclear safety and security remains deeply concerning,” Andrabi said in a statement. “Over the past several decades, numerous incidents involving the theft and illicit trafficking of sensitive nuclear material and other radioactive substances have exposed serious deficiencies in India’s ability to safeguard its facilities.”

“As recently as last year,” he continued, “radioactive equipment from the Bhabha Atomic Research Center (BARC), along with the highly radioactive substance Californium— valued at over USD 100 million— was found on sale in India.”

“Such recurring incidents of theft and illicit sale point to the existence of a thriving nuclear black market for sensitive and dual-use materials in India,” the spokesperson added. “The international community must take serious note of these alarming gaps, which pose a grave threat to both regional and global security.”

Andrabi called India’s claims against Pakistan “baseless, malicious and part of a disinformation campaign,” adding that his country’s last nuclear tests were conducted in May 1998.

“Pakistan’s nuclear program operates under a robust command and control structure, comprehensive export controls, and an impeccable record of compliance with the global non-proliferation regime,” he said.

He highlighted that Pakistan also supported United Nations resolutions calling for a ban on nuclear testing, lamenting that India’s abstentions from the resolutions reflected “ambiguous and questionable intentions” regarding the issue.

Pakistan and India became nuclear powers in 1998 after conducting a series of underground nuclear tests. India carried out its tests first in May that year at Pokhran in Rajasthan, prompting Pakistan to respond with its own detonations at Chagai in Balochistan weeks later.

Both countries also fought a four-day war in May 2025 following a militant attack on civilians in Indian-administered Kashmir that New Delhi blamed on Islamabad and Pakistan denied.

The violence escalated into the deadliest cross-border hostilities since 2019, with missile, drone and artillery exchanges killing more than 70 people before both sides agreed to a US-brokered ceasefire.