Pakistan’s Food Sector Drowns in $1.17 Billion Debt Crisis
- Rising arrears mirror power, gas woes as fiscal strains deepen
- Government struggles to recover dues amid IMF pressure
Pakistan’s food sector has been swept into a mounting circular debt crisis exceeding Rs325.6 billion ($1.17 billion), marking the third major fault line in the country’s finances after similar meltdowns in the power and gas sectors, revealed internal government documents.
The Trading Corporation of Pakistan (TCP) report shows that as of Sept. 30, federal and provincial entities owed the state-run trading body Rs88.28 billion in principal and Rs237.32 billion in interest payments — with nearly three-quarters of the debt now consisting of accumulated markup. The ballooning arrears expose how Pakistan’s weak fiscal controls and chronic payment delays continue to ripple through key sectors of the economy.
The National Fertilizer Marketing Ltd. (NFML) tops the list of defaulters, owing Rs126.78 billion, followed by the Utility Stores Corporation (USC) at Rs110 billion — both under federal management. Their defaults underscore the deep-seated inefficiencies and financial mismanagement that plague Pakistan’s state-owned enterprises.
Among provincial governments, Punjab leads with Rs17.59 billion, followed by Khyber Pakhtunkhwa (Rs13.24 billion), Sindh (Rs9.59 billion), and Balochistan (Rs9.50 billion). Smaller regions, including Gilgit-Baltistan and Azad Jammu and Kashmir, collectively owe nearly Rs9 billion.
Other debtors include the Pakistan Navy, the Directorate General Procurement Army, PASSCO, and the Ministries of Food Security and Industries, with unpaid bills running into billions.
Officials say the TCP has been issuing payment reminders every 15 days, but responses remain “largely indifferent.” The non-payments have started to hamper the corporation’s ability to import essential food commodities, potentially tightening domestic supplies.
Economists warn the mounting debt mirrors Pakistan’s energy-sector crisis, which has long strained public finances and fueled inflation. “This is another symptom of systemic fiscal decay,” said one Islamabad-based economist. “If the government doesn’t act swiftly, the food sector could face a liquidity crunch threatening both market stability and food security.”
The latest figures come as Pakistan struggles to meet fiscal targets under its $7 billion IMF program, which demands tighter control over state spending and improved governance of public-sector entities — challenges that this new debt spiral may only deepen.
