ISLAMABAD, November 11, 2024: The Securities and Exchange Commission of Pakistan (SECP) has announced a temporary deferment of the Expected Credit Losses (ECL) Model, under International Financial Reporting Standard (IFRS)-9 ‘Financial Instruments’, for companies holding financial assets directly or indirectly owed by the Government of Pakistan in connection with inter-corporate circular debt. This deferment extends the effective date to financial years ending on or before December 31, 2025.
This extension has been granted in light of the Institute of Chartered Accountants of Pakistan’s (ICAP) ongoing development of comprehensive guidelines. These guidelines, expected by December 31, 2024, aim to address the unique application of the ECL Model to Pakistan’s circular debt scenario, providing a framework that ensures full compliance with IFRS-9. The SECP anticipates that this guidance will enable companies to more accurately and effectively apply the ECL requirements to the circular debt context in Pakistan.
