Islamabad ( Web News)
The State Bank has stated that the government is negotiating with banks to obtain a loan of Rs 1,275 billion to eliminate the circular debt in the power sector. Out of this, Rs 658 billion will be used to repay power sector loans, Rs 400 billion will be raised through Sukuk bonds, and the remaining amount will be used for repaying other debts.
A meeting of the Senate Standing Committee on Finance was held at Parliament House, Islamabad, under the chairmanship of Senator Saleem Mandviwalla. The Deputy Governor of the State Bank informed the committee that the government is acquiring Rs 1,275 billion from banks to resolve the power sector’s circular debt, and an additional Rs 670 billion will be borrowed for other necessities. Negotiations between the government and banks are currently in the final stages.
Senator Shibli Faraz questioned whether taking a loan to pay off circular debt would solve the problem, asking how long the new loan would last. He raised concerns that while the government previously paid interest on the loans, now the burden would fall on the public. He argued that the root causes of the issue have not been addressed.
Chairman of the Committee Senator Saleem Mandviwalla noted that the Power Division was not present at the meeting, hence no official response could be given. He remarked that the government is simply transferring the circular debt from one place to another.
The committee was also informed that the subcommittee formed to investigate money laundering under the guise of solar panel imports has requested more time. Mandviwalla noted that the subcommittee was formed on January 6 and had not completed its work by April 23. He also pointed out that members including Mohsin Aziz were not present at the meeting.
Senator Sherry Rehman stated that Mohsin Aziz, the subcommittee convener, had suggested forming a new committee for the matter. The Chairman of the FBR (Federal Board of Revenue) said that the subcommittee had made significant progress and the FBR had conducted substantial investigations. It was suggested that the same committee be restructured and granted one more month to complete its work.
The meeting also discussed a bill proposed by Senator Zeeshan Khanzada to amend the Income Tax Law. Saleem Mandviwalla noted that the FBR considered it a money bill and said such amendments should be made through the Finance Bill. A representative from the Ministry of Law stated that it would be up to the Speaker to decide whether a private member’s bill to amend the Income Tax Law qualifies as a money bill. Mandviwalla said the bill would be referred to the Speaker.
During the meeting, a briefing was also given regarding the federal government’s rightsizing efforts. The committee was informed that 32,000 government posts have already been abolished, and 50 government departments are being phased out, merged, or dissolved in four stages.