Big Step: Rs1.275 Trillion Bank Deal to Help Fix Economy
In a major financial development, Adviser to the Finance Minister Khurram Shehzad shared that the government has made strong progress in fixing Pakistan’s long, standing circular debt issue. The announcement came from Islamabad, where he revealed that a breakthrough was achieved through a large Islamic financing deal worth Rs1.275 trillion, signed with 18 commercial banks. This move marks a big step forward in stabilizing the country’s economy. This Bank Deal is seen as a critical move toward solving longstanding debt challenges.
Calling it a major step forward, Khurram Shehzad explained that the progress lays the groundwork for Prime Minister Shehbaz Sharif’s plan to improve Pakistan’s energy system. He said this effort will help bring lasting changes to the country’s power sector. The government hopes this Bank Deal will bring structural reforms to the energy sector.
The new financing deal is set to wipe out Rs1.275 trillion in unpaid electricity bills, which have been a big problem for Pakistan’s power system for many years. Officials believe this will bring stability and help improve the energy sector going forward. The Bank Deal aims to reduce the burden of unpaid electricity bills.
To help reduce financial pressure in the energy sector, a large portion of the funds will be used to settle old payments. Rs683 billion will be given to the Power Holding Company to clear its debts, while Rs592 billion will go to private power companies (IPPs). This step is expected to improve cash flow and restore trust in the system. This Bank Deal is designed to restore liquidity and trust in power companies.
In an effort to ease financial stress in the energy sector, Pakistan has arranged a Rs1.275 trillion loan at a reduced cost. The loan comes with an interest rate that is 0.9% lower than the regular three-month KIBOR. This step is expected to bring lasting improvements to the country’s financial and energy systems.
Bank Deal Makes Long-Term Improvements Stronger
Electricity users won’t face any new extra costs under the updated loan system, according to Khurram Shehzad. He explained that the current charge of Rs3 per unit, added to help pay off past loans, will stay the same for the next five to six years. No new burden will be placed on the public through this plan.
To stop the return of circular debt and protect the national budget, a clear payment plan has been set. Khurram Shehzad explained that the loan will be paid back in 24 installments over time, with no more than Rs323 billion to be paid each year. This careful plan aims to solve the debt issue without creating new financial stress for the country.
As part of a broader agreement with the IMF worth $7 billion, Pakistan has launched this step to fix major issues in the energy sector. The focus is to stop the build-up of unpaid electricity bills and make the system more reliable and efficient.
This step also fits with the government’s long-term plan to grow interest-free banking in the country. Right now, nearly 25% of the banking system is already following Islamic finance rules. The deal supports this shift and keeps the government on track with its goal for a fully Islamic financial model. It also shows Pakistan’s effort to reduce reliance on conventional interest-based loans. The Bank Deal aligns with Pakistan’s shift toward Islamic finance.
By promoting Islamic finance, the government hopes to build a more fair and stable economy. This direction also matches the public’s growing interest in Shariah-compliant banking. Experts believe this change could attract more local and foreign investment. It may also create more trust in the financial system over time. Overall, it marks a big move toward long-term economic and financial reforms. The Bank Deal could boost both investor confidence and public trust.
The recent agreement is being seen as a strong and positive move for the country. It has been called a major achievement, with credit going to Prime Minister Shehbaz Sharif’s government for taking clear and confident steps to solve a serious economic issue. Many believe this effort could lead to long-term improvements in Pakistan’s financial system.
It shows a clear commitment to fixing deep-rooted financial challenges. Experts say this could help restore trust in the country’s energy and banking sectors. If successful, the strategy may also attract more support from global financial partners. Global interest may rise as confidence builds around the Bank Deal.
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