19/01/2026
📢 Regulatory Update: IFRS-9 Exemption for Circular Debt
SECP has issued a new notification (S.R.O. 25(I)/2026) providing significant relief regarding the accounting treatment of financial assets related to circular debt.
🔑 Key Highlights:
• The Exemption: Companies holding financial assets due from (or ultimately due from) the Government of Pakistan in respect of circular debt are exempt from the Expected Credit Losses (ECL) Method under IFRS-9.
• Extended Timeline: This exemption is applicable for financial years ending on or before December 31, 2026.
• The Alternative: During this period, companies must continue to follow the requirements of IAS 39 (Financial Instruments: Recognition and Measurement) for these specific assets.
💡 Why this matters:
This move is aimed at easing the financial reporting burden on companies heavily impacted by the energy sector's circular debt, preventing large, immediate hits to profitability that would otherwise be required under the more stringent IFRS-9 impairment model.
