Pakistan’s circular debt in the power and gas sectors has surged to Rs5,100 billion, up sharply from Rs3,500 billion last year, officials revealed during a briefing to the National Assembly Standing Committee on Finance.

The committee was informed that the country’s total external debt has reached $137.56 billion, highlighting continued fiscal pressure as Pakistan prepares its FY2026–27 budget.

During the meeting, lawmakers reviewed Pakistan’s overall economic situation, IMF programme performance, and upcoming budget priorities. Officials said the economy is showing signs of gradual stabilization but remains in a fragile phase, with persistent structural risks.

For FY2026–27, GDP growth is projected between 3.5% and 4.5%, while inflation has again returned to double digits, reaching 10.9% year-on-year in April 2026.

Committee members expressed concern over Pakistan’s continued reliance on indirect taxes and petroleum levies instead of expanding the direct tax base. They warned that this approach is placing additional burden on consumers and slowing long-term economic reform.

The chairman of the committee also raised alarm over rising circular debt, slow reforms in state-owned enterprises, and worsening socio-economic conditions driven by inflation, unemployment, and poverty.