Energy Minister Sardar Awais Ahmad Khan Leghari announced on Friday that Pakistan has inked term sheets with 18 commercial banks for an Islamic finance facility worth Rs1.275 trillion ($4.50 billion) to assist in repaying the growing debt in its power sector.
Much of the power infrastructure is owned or controlled by the government, which is struggling with mounting “circular debt,” unpaid bills, and subsidies that have stifled the industry and burdened the economy.
The cash shortage is a major focus of Pakistan’s $7 billion IMF program since it has affected supply, deterred investment, and increased budgetary pressure.
Finding money to close the deficit has been a recurring problem, and efforts to resolve the legacy debt have been complicated by limited fiscal space and expensive costs.