ISLAMABAD:Former President of Islamabad Chamber of Commerce and Industry (ICCI) Dr Shahid Rasheed Butt on Sunday expressed concern over increasing circular debt and ballooning trade deficit.
Power sector circular debt and trade deficit should be controlled; otherwise, it will create problems for the masses and the economy and result in a mini-budget soon after the annual budget, he said in a statement.
Butt said that reforms in the power sector is slower than needed which will push circular debt to Rs2.7 billion by the end of this fiscal. The Power Division has demanded Rs501 billion as a subsidy but the government has decided to pay 330 billion rupees leaving the only option to add Rs 170 billion to the circular debt, he said.
The business leader said that the government has decided not to increase power tariff during the next year but avoiding reforms will force it to abide by the agreements with international institutions to increase power tariff otherwise tensions will increase which may hit the IMF programme.
He noted that exports are not increasing as required while imports have picked up to an unprecedented level. The trade gap during the month of March was 2.97 billion dollars which was almost 100 percent more than the corresponding period. Statistics show that exports from July to March remained $18.7 billion while imports were $39.2 billion, he said, adding that the government plans to import wheat, sugar, and cotton would increase the trade deficit.
He said that the value of the rupee had increased by four percent against the US dollar in three months but the prices had not come down accordingly while prices of some items had increased which was a result of administrative weakness. “Pakistan is facing a steep fall in the foreign direct investment that should be increased to keep forex reserves stable,” he said.