"Circular debt merits urgent attention as it has become a major threat to the country's image, credit rating and economic survival," opined Pakistan Businessmen and Intellectuals Forum's (PBIF) Mian Zahid Hussain. He said that it is also a threat to industrial expansion, investment in Thar coal and other energy projects and to those willing to invest in the country's energy sector.
Speaking to the business community, he said that circular debt amounting to Rs 650 billion will hurt power generation by private sector, thereby leaving them unable to run power plants. He said that circular debt had badly hit the PSO's ability to buy fuel, resulting in fuel crisis and pushing the government to pump billions of rupees in the country's largest retailer's accounts so as to keep it afloat.
Such a situation, he said, could affect Pakistan's credit rating and change its perception among the international business community which we cannot afford, and added: "The circular debt results in loss of around Rs 400bn to the industrial sector, increase in cost of production and decline in exports and tax collection."
Elaborating, he said industries opting for alternate means of power generation will have to face up to 30 per cent increase in energy cost and loss to some small businesses up to 50pc. At the outset, he urged the government to introduce reforms in energy sector, ensure effective management, reduce incidence of thefts and exploit new hydro-electric projects as well as Thar coal reserves.
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