ISLAMABAD-A parliamentary committee on Friday expressed grave concerns about the policies adopted by the government and loopholes of its implementation with regard to preventing the spread of circular debt. Meeting of National Assembly Standing Committee on Finance and Revenue was held in Parliament House, Islamabad, under the chairmanship of Faiz Ullah, MNA. The committee members were of the view that increase in circular debt will create huge problems for economy of the country, especially towards the smooth functioning of the industries. After detailed discussion, the committee unanimously decided that Power Division would be invited in the next meeting of the Committee for further deliberations in this regard.
The Secretary Ministry of Finance briefed the Committee about circular debt and its financial implication for upcoming budget. He informed that circular debt was of two types i.e. debt stock and flow. Additional Secretary, Finance Division informed the Committee about the causes of circular debt and presented the important numbers for December 2020 in total and breakup wise. He said that PHPL/CPPA number can vary for want of reconciliation or payments in transit. He said subsidy of Rs.52 billion has been released, so far. Kamran Ali Afzal, Secretary Finance Division, informed that Finance Division was working with Power Division on two pronged strategy. Rs.72 billion will be paid to lending banks during the current financial year and an amount of Rs.28 billion has been paid till date in that account.
sMuhammad Ali Malik, Director, State Bank of Pakistan (SBP) apprised the Committee about the foreign exchange reserves vis-à-vis capital account pressure for the remaining FY2021, in light of increasing forward swap position. He said, since June, 2019, SBPs FX forward swap liabilities have shown a declining trend in general and have been reduced to US$4.6 billion at the end of November, 2020 which showed an improvement of US$3.4 billion and US$1.2 billion from June, 2019 and June, 2020 respectively, in addition to this improvement in SBP’s forward swap position, SBP FX reserves have also been improved for instance, SBP’s FX reserves that were recorded at US$7.3 billion at the end of June, 2020, currently, SBP’s Fx reserves stood at US$13.4 billion as on 8th January, 2021. This improvement of SBP’s FX reserves and forward swap position is a reflection of improved balance of payment position of the country and Pakistan’s current account posted a surplus of US$ 1.6 million in the first five months of FY2021. The Committee members have expressed their apprehensions with regard to expecting pressure on foreign reserves due to upcoming repayment schedules, in case the suspension of IMF Programme. However, Director SBP responded that Chinese Debt Repayments can be rollover and IMF Program could be extended. He also informed the Committee that government has received US$480 million in ‘Roshan-Pakistan Program’.
The Committee discussed “The Post Office Cash Certificate (Amendment) Bill, 2020” “The Post Office National Savings Certificates (Amendment) Bill, 2020” and The Government Savings Bank (Amendment) Bill, 2020” (Government Bill). The Additional Secretary Ministry of Finance, informed the Committee that in the backdrop of judgment of the Supreme Court of Pakistan the Federal Cabinet inter-alia decided that all Ministries and Divisions in consultation with Law & Justice Division will make amendments in respective Act/Rules and replace the words “Federal Government with appropriate authority/authorities. He also explained the causes for suggesting these changes in different sections in the Bill. The Committee members have expressed their concerns regarding proposed amendments. The Committee deferred the Bills and decided that view point of Ministry of Law should be obtained in the upcoming meeting of the Committee thereon.