ISLAMABAD: The Islamabad Chamber of Commerce and Industry (ICCI) has shown great concerns over the phenomenal increase in external debt which has soared by 75 percent during the last 9 years reaching $65.5 billion for the first time in the history of the country and called upon the government to curb this dangerous trend as it would threaten the economic future of Pakistan and bring more problems for the private sector as well as the common man.
ICCI president Atif Ikram Shiekh said that 75% increase in Pakistan’s external debt from 2006 to 2015 and acquiring foreign loans of $ 27 billion during the last two and a half year showed that successive governments have relied heavily on foreign borrowings to run the affairs of the country instead of taking measures to generate indigenous resources. He said as per State Bank of Pakistan’s latest report, if Pakistan continued to obtain external loans at this pace, the country’s external debt could swell to $ 90 billion by 2020 which should be a cause of concern for the policy makers.
Atif Ikram Sheikh said that the unwise approach of accumulating foreign debt would weaken economic future of Pakistan as debt burden and debt servicing liabilities would continue to grow over time. It would consume major portion of future budgets leaving much less for economic development of the country. He said Pakistan’s external debt in absolute terms was just $3.4 billion in 1970, but it was very unfortunate that over the last 46 years, external debt have registered an increase of over 1800 percent. It demonstrated the reckless approach of successive governments in making Pakistan one of the highly indebted countries as the economic growth of the country never matched with rise in foreign debt.
He said the government would start paying back foreign loans from 2017 taken from foreign lenders and was afraid that it would have to obtain more loans to pay back the existing ones due to weak financial position. He said there was an urgent need of arresting this unhealthy trend as rising external debt would have multiple negative impacts on the economy. It would further enhance debt service liabilities, squeeze funds for private sector credit, affect production and investment activities and impede economic development of the country. He said government should focus on creating enabling environment for growth of business & investment activities and facilitate promotion of exports so that country could generate more indigenous resources for sustainable economic development and get rid of heavy reliance on foreign debt.
