Pakistan to borrow $5 billion to pay off its outstanding electricity bill

Pakistan will borrow over $5 billion to pay off its outstanding electricity bill as anger rises over power cuts that led to violence in some cities, The Financial Times reports.

Parts of Pakistan have remained without electricity for up to 20 hours a day this summer and according to the finance ministry, the shortages had led to annual losses equivalent to 2 per cent of GDP, the report said.

The government's move constituted a gamble with the administration looking for a quick-fix solution to ease the power crisis, according to commentators. But some point out that taking on more borrowing would only lead to further debt problems over the longer term.

The government would raise the $5 billion through the sale of government bonds for paying off the debt owed to the country's private electricity producers as also fuel suppliers.

According to Ishaq Dar, the finance minister, the government had to take the country out of the mess it was in. He added, clearing this backlog was the top priority of the government.

The government had said it would clear the debts by August this year in what was the largest such single payment to tackle serious shortages of electricity in the country's history.