Overview

• The government finalized a Rs1.225 trillion syndicated Islamic financing with 18 banks at KIBOR minus 0.9%, which officials describe as the country’s largest financing and restructuring transaction.
• Officials report the circular debt stock has fallen to roughly Rs1.614–1.64 trillion after about Rs780 billion in savings from IPP renegotiations, lower losses at DISCOs, and reduced interest costs.
• Authorities told the IMF the new facility and recent steps bring the outstanding burden to around Rs400 billion, with a target of zero fresh circular debt inflows during the current fiscal year.
• The plan channels the existing Rs3.23 per unit surcharge to repay the facility, with ministers saying the charge will be phased out over five to six years.
• The concessional terms are projected to save 3.5%–5% in interest costs, and the government asserts the package will eliminate circular debt within six years subject to sustained reforms.