NA body approves ‘Netting of Financial Arrangements Bill 2025’

ISLAMABAD: In a major development at Parliament House, the National Assembly Standing Committee on Finance has approved the Netting of Financial Arrangements Bill 2025 and amendments to the Fiscal Responsibility and Debt Limitation Act here on Thursday. The NA Panel met under the chairmanship of Syed Naveed Qamar in the Parliament House, where Finance Ministry officials informed the committee that under the existing law, the public debt-to-GDP ratio should remain within 60 percent, but it stood at 69. 9 percent last year. They said there were expectations of some reduction in overall debt during the current fiscal year. The committee was informed that reforms in domestic debt management, stating that the average maturity period of local debt, which was around two and a half years in 2022, had been extended under recent measures to improve sustainability. However, committee member Javed Hanif expressed concern over repeated breaches of the legal debt ceiling and said parliament was often not kept fully informed. In response, Bilal Azhar Kayani said rising fiscal deficits had contributed to higher borrowing, but the government had taken steps to contain the deficit and had achieved a primary surplus. The committee chairman directed that quarterly reports on total public debt should be presented to parliament to ensure transparency and oversight. The proposed netting law will allow financial institutions and corporate entities to settle mutual obligations by offsetting dues against each other under legally enforceable agreements. State Bank officials told the committee that once agreements between two parties are formalised, the netting mechanism would apply, enabling adjustment of outstanding liabilities at the time of settlement. The move is aimed at reducing credit risk and improving efficiency in financial transactions. Naveed Qamar pointed out that prolonged litigation and stay orders often delay resolution of financial disputes, while Minister of State for Finance Bilal Azhar Kayani said the new framework would facilitate dispute resolution through arbitration mechanisms. Minister of State for Finance Bilal Azhar Kayani informed the committee that investment under the Roshan Digital Account has reached USD 12 billion so far, adding that overseas companies have now also been allowed to invest through the scheme. During the meeting, economist Ali Salman warned that Pakistan’s remittances could be affected amid ongoing regional tensions, adding that a surge in petroleum prices may further increase economic losses. He cautioned that if the crisis persists, Pakistan’s economy could face losses ranging between USD 10 billion and USD 15 billion in the current fiscal year. Officials from the central bank briefed the committee that the Netting of Financial Arrangements Bill 2025 will apply to agreements between banks and the corporate sector, enabling settlement of mutual liabilities. Under the proposed law, parties will be able to adjust outstanding dues against each other at the time of loan recovery. The bill was presented before the committee by a representative of the State Bank of Pakistan. Chairman Naveed Qamar observed that due to stay orders, many disputes remain unresolved for long periods. Minister of State Bilal Azhar Kayani added that under the new law, disputes between parties would be resolved through an arbitration mechanism. The Ministry of Finance further informed the committee that under the debt limitation law, the public debt ceiling should be maintained at 60 percent of GDP. However, it stood at 69. 9 percent last year. Officials expressed hope that total public debt may decline during the current fiscal year. The committee was also told that reforms introduced in 2022 helped extend the maturity period of domestic debt from two and a half years. Committee member Javed Hanif pointed out that the legal debt ceiling is being violated and Parliament is often kept uninformed. In response, Bilal Azhar Kayani said that rising fiscal deficits have contributed to higher debt levels, but the government has taken steps to reduce the deficit and is currently maintaining a primary surplus. The committee chairman directed that quarterly reports on total public debt should be presented before Parliament. Economist Ali Salman from PRIME Institute, while briefing the committee, warned that the country’s macroeconomic outlook remained fragile, particularly in the context of tensions in the Middle East. They said rising global oil prices could increase Pakistan’s import bill by up to USD 4 billion during the current fiscal year. Economic experts also warned that the tense situation in the Middle East poses risks to Pakistan’s macroeconomic framework. They highlighted challenges including inflation, energy shortages, and rising global oil prices. It was noted that higher oil prices could increase the import bill by an additional USD 4 billion this fiscal year. Experts cautioned that reduced gas supply could impact fertilizer production and agricultural output in the coming season. They also warned that remittances could decline by up to USD 300 million per month due to regional instability. The committee was informed that Pakistan relies heavily on RLNG and furnace oil for electricity generation, and disruptions in their supply have contributed to load-shedding. Experts added that petroleum prices have increased by 42 percent over the past two months, with around 80 percent of fuel consumption linked to transport and logistics. The rise in fuel prices has led to a sharp increase in transport fares, with some intra-city fares doubling, while others have risen by 40 to 50 percent. The committee was further told that around 60 percent of Pakistan’s exports remain dependent on the textile sector, and higher freight costs could adversely affect export performance. He also cautioned that disruptions in energy supplies, including RLNG and furnace oil, were affecting electricity generation, contributing to load-shedding. Pakistan relies heavily on imported fuels for power generation, making it vulnerable to external shocks. Economists further warned that remittances could decline by up to USD 300 million per month if regional instability persists, while overall economic losses could reach between USD 10 billion and USD 15 billion during the current fiscal year in the case of a prolonged crisis. The expert noted that inflation remained a major challenge and could further strain the macroeconomic framework. They added that petroleum prices had increased by around 42 percent in recent months, with nearly 80 percent of fuel consumption linked to transport and logistics, driving up costs across the economy. He said freight costs were already impacting exports, of which around 60 percent are based on the textile sector. Gas supply disruptions could also hit fertiliser production, raising concerns about lower agricultural output in the coming season. The committee was informed that urban transport fares had risen sharply in some areas, in certain cases doubling, while increases of 40 to 50 percent were reported elsewhere, adding to inflationary pressures on households. Copyright Business Recorder, 2026

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