KARACHI: Pakistan’s government is negotiating a 1.25 trillion Pakistani rupee ($4.47 billion) loan with commercial banks to reduce its bulging energy sector debt, the power minister and banking association said.
Plugging unresolved debt across the sector is a top priority under an ongoing $7 billion International Monetary Fund (IMF) bailout, which has helped Pakistan dig its way out of an economic crisis.
“The loan will be repaid over a period of 5 to 7 years,” Power Minister, Awais Leghari told Reuters, adding that the term sheets are yet to be signed.
Pakistan’s government, the largest shareholder or owner of most power companies, faces a challenge in resolving debt due to fiscal constraints. To address this, Islamabad has raised energy prices, as recommended by the IMF, but still needs to settle the accumulated debt.
“We’ve approached many banks, let’s see how many participate. It’s a commercial transaction and they have the choice of participating, however, we think there is liquidity in the system for it and banks have the appetite,” Leghari said.
The government plans to reduce “circular debt” — public liabilities that build up in the power sector due to subsidies and unpaid bills — this year by eliminating government-guaranteed debt and moving to a revenue-based system.
This approach is expected to lower financing costs, enabling the government to pay off interest and service debt obligations, he added.
“Such repricing of liabilities induces more efficiency, and reduces cost for consumers,” said Ammar Habib Khan, adviser to the power minister.
Zafar Masud, Chairman of the Pakistan Banks Association, told Reuters that the interest rate would be a floating exchange rate and the country’s top banks would participate, in addition to those who are already part of the outstanding loan.
“This will help in clearing up all the debt in the next 4 to 6 years which has been sitting on banks’ balance sheets,” he said.
Masud added that more than half of the 1.25 trillion debt is already on the banks’ books and is undergoing restructuring through self-liquidating facilities, which currently lack identifiable cash flows to support them.
($1 = 279.9000 Pakistani rupees)
Pakistan nearing $4.4 billion loan to ease power sector debt
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Pakistan nearing $4.4 billion loan to ease power sector debt
- Pakistan’s government is negotiating 1.25 trillion Pakistani rupee loan with commercial banks
- Plugging unresolved power sector debt is top priority under ongoing IMF bailout program
Pakistan stocks hit new all-time high as IMF clears $1.32 billion disbursement
- Benchmark KSE-100 closes at record 169,456 after gaining 1,153 points amid strong buying
- IMF said its executive board approved Pakistan’s latest loan review on Monday, unlocking about $1.2 billion
ISLAMABAD: Pakistan’s equity market surged to an all-time high on Tuesday, with the benchmark KSE-100 index closing at 169,456, up 1,153 points (0.69 percent), as investor sentiment strengthened following the IMF’s approval of fresh disbursements under its existing loan program.
Traders attributed the record close to renewed risk appetite, driven by strong local institutional buying and confidence in the macro-economic outlook after the IMF said its executive board approved Pakistan’s latest loan review on Monday, unlocking about $1.2 billion and keeping the country’s IMF program on track. The surge extended a bullish trend that has carried the index upward through the final quarter of 2025.
In a session summary, Topline Securities said market momentum remained firmly on the upside.
“The bulls commanded today’s trading session with remarkable strength, lifting the benchmark index to breathtaking new heights,” it said. “After soaring to an intraday high of 1,297 points, the market closed at a record-breaking 169,456, gaining 1,153 points or 0.69 percent.”
Trading activity remained strong, with total volumes reaching 1.02 billion shares, while turnover rose to Rs 51.1 billion. K-Electric (KEL) led the volume chart with approximately 86.7 million shares traded, while heavyweights including Fauji Fertilizer (FFC), Lucky Cement (LUCK), Habib Bank Ltd. (HBL), Pakistan State Oil (PSO), and Maple Leaf Cement (MLCF) collectively contributed around 640 points to the index’s gain.
Analysts said improving liquidity, optimism over external financing and active participation from local mutual funds supported the rally.
Market participants will now watch for macro data releases, fiscal performance indicators and further external funding commitments to assess whether the rally can sustain in the coming weeks.
