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In Pakistan, circular debt is a public debt which is a cascade of unpaid government subsidies,[1] which results in accumulation of debt on distribution companies. When this happens, the distribution companies cannot pay independent power producers who in turn, are unable to pay fuel-providing companies thus creating the debt effect as seen in the country.[2]
As of July 2024, the total circular debt of Pakistan was Rs. 5,730 billion.[3]
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