Pakistan’s circular debt debate often begins and ends with one number: the stock outstanding at the end of the financial year. But that number, important as it is, does not tell the whole story. The more important question is what happened during the year. How much financial pressure entered the system? What caused it? How much was paid, adjusted or settled? And, most importantly, are the underlying causes of new accumulation being reduced?

At June 2026, power-sector circular debt stood at Rs. 1.675 trillion, compared with Rs. 1.614 trillion a year earlier, an increase of only Rs. 61 billion. At first glance, this appears relatively modest. But the annual flow tells a much larger story. During FY2025–26, the system recorded Rs. 609 billion in gross additions. After reported reductions and other accounting adjustments, the reported gross flow was around Rs. 364 billion. Stock payments of around Rs. 302 billion subsequently helped contain the increase in the accumulated stock. (Power Division, June 2026 Circular Debt data)

These figures should not be treated as alternative estimates of the same number. They represent different stages of the circular-debt accounting process. Rs. 609 billion reflects gross additions; Rs. 364 billion is the reported flow after reductions and adjustments; and Rs. 61 billion is the net change in the closing stock. (Power Division, FY2025–26 Circular Debt data) This distinction matters because the Rs. 61 billion increase does not represent the amount of financial pressure created during the year. A substantial volume of new liabilities can be offset through payments, subsidies, adjustments and other measures, leaving a much smaller change in the closing stock.

If Rs. 609 billion can enter the system as gross additions while the closing stock rises by only Rs. 61 billion, the Rs.........

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