ICCI for resolving circular debt issue to promote private sector

  • June 08, 2010
The circular debt is the main reason behind the power crisis, which is hampering the growth of private sector and government should take measures to resolve this issue on priority basis to generate employment and alleviate poverty.

This was said by Mr.Zaid Maqbool, President, Islamabad Chamber of Commerce & Industry in a statement. He said Finance Minister Dr. Hafeez  A Sheikh had admitted on the floor of the house during his budget speech that promotion of private sector was the key for employment generation, but did not come up with any measures to resolve the issues that are constraining the expansion of private sector.

He said the amount of circular debt has increased to alarming level of Rs.125 billion and if not resolved urgently, it will cause prolonged power outages, badly affecting the productivity of industry, which is already operating far below its capacity due to inconsistent power supply.

He said government has projected GDP growth target of 4.1 percent for the fiscal year 2010-11, but without resolving circular debt and power crisis, achieving this target will not be possible.

Mr.Zahid Maqbool also showed great concern over the huge fiscal deficit of Rs.685 billion projected for 2010-11 as it will force the government to go for heavy borrowing from banks, which will cause more inflation and crowd out the private sector from credit.

He also showed reservations over allocation of Rs.5-billion for the scheme of guaranteed employment of unskilled workers for one hundred days in rural areas as it would not contribute meaningfully in tackling unemployment problem.

He said the better way was that government should have been utilized this amount to provide vocational training and technical education to unemployed youngsters so that they could have improved their prospects for getting long term employment in manufacturing and industrial units.

ICCI President strongly opposed providing financial cushion to public sector white elephants like PIA, Railways, Pakistan Steels Mills etc. which annually consumed about Rs.300-billions of taxpayers money. He said being revenue generating entities, these SOEs should be a good source of tax revenue for the government instead of becoming a burden on financial exchequer. He said government should reform them or privatize them so that taxpayers money could not be wasted on keeping afloat such organizations.