With the government still skirting around the issue of circular debt, the World Bank (WB) has said Pakistan will ultimately have to book this liability – which currently stands at a whopping Rs661 billion – on the budget to improve performance in the energy sector. The Washington-based lender’s ‘advice’ – published in its Pakistan Development Update released on Wednesday – highlights a contentious issue the Pakistan Muslim League-Nawaz (PML-N) government has been brushing under the carpet while highlighting its performance on the fiscal front. The report also paints a mixed picture of Pakistan’s economy, saying that the country will miss its annual growth rate target of 5.5% by one percentage point and that investment will also remain flat at 15.1% of the total size of national economy during the current fiscal year. Meeting the 4.3% fiscal deficit target for this year also hinges on the performance of the Federal Board of Revenue and the materialisation of privatisation proceeds, according to the lender. Although reforming the energy sector continues to be a top priority of the PML-N government, the domain inhibits much needed private investment and is generating significant fiscal outlays in the form of subsidies and accumulation of circular debt, WB said. Having booked the amount in the final year of the PPP government and disowning it in its own budget, the PML-N has been able to reduce the fiscal deficit. The point, however, is that circular debt is a persistent issue and exists — even if it is not ‘accounted for’ in the books. The power sector continues to be plagued with inefficiency and corruption. Added to this are the huge receivables and pending payments, coupled with hours-long power outages, and the government has itself a white elephant. The World Bank has said that the circular debt amount will have to be “ultimately financed through the budget”, which means that either the government will impose additional taxes and surcharges, or keep the amount excluded from the budget books till its last year in power. To resolve this serious problem, all stakeholders need to play their roles. The piling circular debt is in large part accrued due to the inability of consumers to clear their dues. This eventually leads to honest consumers paying more than what they bargained for, to compensate for the losses. Electricity theft is a longstanding issue and goes hand in hand with the corruption in power companies. We have examples from within the country where a change in bill collection methods led to a reduction in losses. Why can’t such methods be applied everywhere in the country?
pk.shafaqna.com
