Pakistan's economy could lose up to $300 million due to internet disruptions caused by imposition of a national firewall, the Pakistan Software Houses Association (P@SHA) said in a press release on Thursday.

Islamabad is implementing an internet firewall to monitor and regulate content and social media platforms, according local media reports. The government denies the use of the firewall for censorship.

Ali Ihsan, senior vice chairman of P@SHA, said the imposition of the firewall has already caused prolonged internet disconnections and erratic VPN performance, threatening a "complete meltdown of business operations".

"These disruptions are not mere inconveniences; but, a direct, tangible and aggressive assault on the industry's viability – inflicting an estimated and devastating financial losses estimated to reach $300 million, which can further increase exponentially," he said in the statement.

Pakistan's telecommunication authority and Pakistan's Minister of State for Information Technology Shaza Fatima Khawaja did not immediately respond.

Earlier this month, Khawaja told local media that the government did not plan to use firewalls as a form of censorship.

Pakistan has already blocked access to social media platform X since the February elections in which jailed former prime minister Imran Khan won the most seats despite a crackdown and ban on his party.

The government has said the blocking was to stop anti state activities and a failure by X to adhere to local Pakistani laws. Rights activists say the blocking of X is designed to stifle critical voices and democratic accountability in the country.

In its statement, P@SHA said that the government's lack of transparency around the firewall had "ignited a firestorm of distrust" among internet users and Pakistan's global IT clients who fear their proprietary data and privacy will be compromised.

P@SHA demanded an "immediate and unconditional halt to this digital siege" and called on the government to engage with the industry to develop a cybersecurity framework.

Pakistan recorded $298 million in IT exports in June, up 33% from the year before. During the fiscal year that ended in June, IT exports were worth $3.2 billion, up 24% from $2.5 billion in the fiscal year 2023.