The Conundrum of Circular Debt

Abstract

This paper attempts to study the dynamics of circular debt and its value-destructive consequences for the public by focusing on the case study of Pakistan. It examines how headwinds faced by developing economies due to non-natural energy crises is evidence of the fact that there are flaws and inconsistencies on the part of national stakeholders (public value agents) in keeping pace with the demand-supply requirements of power services. This inability to manage the public’s needs, a shortage of power generation from the back-end, and technical as well as political problems give rise to a vicious cycle of circular debt. The debt is being accumulated at the cost of the state’s social and economic stability. This implies that circular debt is a wider problem of public value creation, which must be addressed through a concerted and joint effort of public value agents.