Circular debt to hit Rs2.43tr next year

The government on Monday approved a new Circular Debt Management Plan, revealing that the disclosed costs of theft and low bill recoveries are projected to mount to a staggering Rs637 billion in the current fiscal year, with the circular debt flow expected to persist despite recent electricity price increases. According to the plan, rather than achieving any reduction in the current Rs2.393 trillion stock of circular debt, it will grow further to Rs2.429 trillion by June next year. This increase comes despite the fact that the government has raised electricity prices and allocated Rs1.2 trillion in subsidies. This indicates that the coalition government will not be able to resolve the power sector's inefficiencies. The plan has also been approved based on questionable assumptions of a Rs300 per dollar exchange rate and an 18.44% interest rate, which could result in an undue financial burden on consumers.