Nothing quite screams “reform” in Pakistan like another creative way to sweep circular debt under the carpet. Yesterday, Islamabad rolled out the red carpet, cut the ribbon, and popped the confetti cannons to celebrate what officials termed — with all caps, chest thumping, and enough adjectives to fill a school essay — THE largest restructuring transaction in the history of Pakistan.
“Historic,” they called it. “Unprecedented,” they proclaimed. “Smoothest,” they insisted. One half-expected balloons, cake, and maybe a DJ night. After all, what’s not to celebrate when the same old circular debt is repackaged, renamed, and resold with the finesse of a used-car salesman?
The banks, naturally, were showered with glowing tributes for their “continued contributions towards nation-building and prosperity of the people of the beloved country.” And why wouldn’t they grin ear-to-ear? In this sweetheart deal, the Debt Servicing Surcharge (DSS) is firmly tattooed into consumer bills for at least the next six years, starting at Rs3.323/unit and—crucially—without an upper cap. Translation: as high as it needs to go, whenever it needs to go. Straight into bank accounts every month, no questions asked. Truly, nation-building has never been so lucrative.
And then, of course, came the blessing of the IMF — the ultimate seal of approval in Pakistan’s debt-soaked universe. Much like a proud parent nodding at a child who keeps borrowing lunch money, the IMF’s nod ensured the party lights could stay on. Because nothing makes our policymakers beam brighter than an international institution rubber-stamping another loan-linked “solution.”
The irony, though, is delicious. Even as ministers sang praises, the July 2025 circular debt report quietly slipped in with another Rs47 billion piled onto the monster—despite DSS already in place. Why? Because, surprise, DSS only services interest. It doesn’t touch the actual disease: the discos’ inefficiencies, theft, and under-recoveries, which in July alone cost a handsome Rs87 billion. But why let boring facts spoil a good party?
This is, at best, a stop-gap plaster on a festering wound. Not reform. Not restructuring. Not renewal. Just the honest consumer footing the bill for sins they never committed, locked in for the next six years. Perhaps what Pakistan needed wasn’t a celebration but a solemn apology—though expecting contrition from policymakers is like expecting a disco to stop losing money.
And as the energy landscape shifts—solar panels sprouting on rooftops, storage solutions edging closer—the assumptions behind this grand deal risk collapsing. Six years from now, the circular debt may well be alive and kicking, still demanding surcharges, still sucking consumers dry. But hey, at least yesterday we got to see our leaders clap for themselves.
Because in Pakistan, when faced with a mountain of debt, the answer isn’t to fix it. The answer is to celebrate it. Again. And again. And again.
Copyright Business Recorder, 2025
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