Pakistan’s circular debt has crossed new records to reach Rs5.73 trillion despite the government’s efforts to bring it under control, official documents have revealed.

The increase in the debt comes despite electricity and gas prices soaring to record highs and an increased emphasis on the issue by the International Monetary Fund.

Of the Rs5.73 trillion, the power sector is reponsible for Rs2.7 trillion while gas companies are responsible for the other Rs3 billion.

The rising debt has put the government in a fix as it is higher by almost Rs1.5 trillion than what the government had conveyed to the IMF during recent talks. The circular debt had also been mentioned in the Fund’s statement after the first review of the stand-by agreement.

The circular debt has also led to another problem: Pakistan now owes over Rs400 billion to Chinese power plants. Media reports have indicated that China has made further loans conditional on the clearance of this money.

Meanwhile the government has made massive increases in the prices of electricty and gas to deal with the issue. The per unit price of electricity has been raised by Rs8 in this fiscal year alone.

However, the measures do not seem to be having an effect as circular debt is now 5.4% of the country’s economy.

The government is once again looking to solutions including a ‘settlement’ plan that could resolve almost Rs1.2 trillion of this debt. However, any plan would have to go through a long process of approvals before being implemented.