ISLAMABAD: Dr Inayat Hussain Deputy Governor of the State Bank of Pakistan (SBP) said Wednesday that the government is currently negotiating terms and conditions with banks to raise around Rs. 1.275 trillion in financing for tackling the issue of circular debt.
While briefing the Senate Standing Committee on Finance and Revenue on Circular Debt Restructuring on Wednesday, Deputy Governor SBP said that the SBP’s negotiations with the banks have entered into the final stage. “The expected deal is at advance stage”, he added.
Out of this amount of around Rs. 1.275 trillion, the government will use Rs 658 billion for payment of debt within the power sector. Break-up revealed that an amount of Rs 400 billion would be used for Sukkuk bonds and remaining amount would be used for payment of debt. An additional amount of nearly Rs 670 billion would be raised for meeting other requirements of the government. In this regard, the assets are being identified in order to secure loans from Islamic banks.
Rs1.275trn loan to tackle circular debt: CPPA-G likely to sign term sheets with 18 banks
Moreover, the Committee was briefed by the Deputy Governor of the State Bank of Pakistan on the government’s efforts to restructure circular debt within the power sector.
Senator Shibli Faraz expressed concern over the strategy, stating that securing new loans to service old ones merely shifts the burden onto the public. He noted that while the government previously paid the mark-up, this responsibility will now fall on the people. He remarked that this is not a sustainable solution, as the root causes remain unresolved, and the circular debt problem will persist unless fundamental reforms are implemented.
The Senate Standing Committee on Finance and Revenue, presided over by Senator Saleem Mandviwalla, convened Wednesday at the Parliament House to deliberate on key policy, legislative, and regulatory matters.
The Committee adopted the report of the Sub-Committee on “Resolving the Issues Related to Solar Panels” and recommended that one month be given to the State Bank of Pakistan and the FBR to finalise the report for future course of action to minimize the issue of over-invoicing and under-invoicing.
The committee members while discussing the Private Member’s Bill titled “The Income Tax (Amendment), 2025,” introduced by Senator Zeeshan Khanzada, unanimously decided to report to the House that the matter may be referred to the Speaker of the National Assembly to ascertain the status of the said bill as a Money Bill or otherwise.
The Committee further deliberated on the federal government’s rightsizing policy, with Committee members voicing concerns over its clarity and implementation. While the goal of reducing government bloat was acknowledged, questions were raised regarding the impact on existing employees.
Senator Sherry Rehman emphasised the need for transparency, asking whether the abolishment of posts targets only vacant positions or also affects current staff, particularly long-serving contract employees. She further stressed the importance of a macro-level overview of the financial and human resource implications by early June.
The Chairman of the Committee reiterated that both departmental mergers and affected employees must be clearly identified to present a comprehensive picture of the policy’s impact. Officials confirmed to the Committee members that the data is still being compiled, with a deadline of 30 June for finalization.
The meeting was attended by Senators Sherry Rehman, Shibli Faraz, Faisal Vawda, Manzoor Ahmed, the Special Secretary and Additional Secretary of the ministry of Finance and Revenue, the Additional Secretary of the Cabinet Division, Chairman FBR, Deputy Governor of the State Bank of Pakistan, and other officials from the relevant departments.
Copyright Business Recorder, 2025
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