UBG urges govt to mitigate threat of circular debt
KARACHI: United Business Group (UBG) said on Thursday circular debt has emerged as a threat to economy, which the government must be settled without wasting time.
The Rs 600 billion debt is discouraging the investors and has potential to hit Pakistan’s ranking on various indexes, UBG added.
UBG leader and Federation of Pakistan Chamber of Commerce (FPCCI) presidential candidate Abdul Rauf Alam expressed that the debt should be settled by receiving outstanding amount from defaulters so that the masses and business community do not suffer.
Speaking to the business community, Mr. Alam said that the power sector should be made to stand on its feet otherwise it would bring the country down mitigate
Rauf Alam, who is also Chairman of Islamabad Chamber of Commerce and Industry (ICCI’s) Founder Group, informed that the power system weaknesses are translating into losses of Rs 200 billion annually while Rs 40 billion are being paid as interest. “The power sector distribution losses have climbed by 18.2% to Rs 50 billion while defaulters including federal and provincial governments owe Rs 628 billion to the power sector,” he added.
Presidential candidate stated that the government and International Monetary Fund (IMF) have agreed to settle circular debt in three years. It would be brought down to 218 billion in 2016-17 and 204 billion in the next year. Similarly, losses would be reduced by 1.5% while recoveries would be improved by 5%, he added.
Lauding the move, Mr. Alam underlined the need to keep the masses insulated from the impact. The business leader said that during 2015, the government spent 40% of its income on debt servicing, 17% on development and 20% on defence.
Rauf Alam said that the finance minister should resolve the issue of banking tax so that the trading community should play their role in national development with peace of mind.