Worries expressed over growing circular debt: PEW
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The Pakistan Economy Watch (PEW) on Wednesday expressed apprehension over rising circular debt which is to compromise growth and hit masses with power outages in the summer.
Circular debt has become a big threat to the image, credit rating and economic survival of the country which merits urgent attention, it said.
Dr. Murtaza Mughal, President PEW said that circular debt is hitting industrial expansion, investment in Thar coal and other energy projects and pushing away investors.
Circular debt worth Rs414 billion has reduced power generation by private sector leaving them unable to but fuel to run power plants of repay bank loans which masses are suffering from heat.
Dr. Murtaza Mughal said that circular debt hits ability of the government institutions to buy fuel resulting in problems.
The emerging situation can hit improving credit rating of Pakistan which will change the perception of country among the international business community which is something we cannot afford.
He said that circular debt results in loss of around Rs 400 billion to the industrial sector, increase cost of production, reduce exports and tax collection and fan restlessness.
Alternate means of power generation results in 30 percent increase in energy cost and some small businesses lose up to 50 percent of their business, he said.
