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In Pakistan, circular debt is a public debt which is a cascade of unpaid government subsidies, 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.

As of July 2024, the total circular debt of Pakistan was Rs. 5,730 billion.

References

1. The Conundrum of Circular Debt. Energy Law & Policy eJournal. Social Science Research Network (SSRN). Accessed 28 January 2020.
2. "Lights out: 'Circular debt' cripples Pakistan's power sector". Al Jazeera.
3. "Circular debt reaches Rs5.73tr". The Express Tribune. 18 July 2024.

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