Businessmen in a meeting presided over by Mian Shaukat Masud, President, Islamabad Chamber of Commerce and Industry showed great concern over country’s rising internal and external debt which has been increasing at a rapid pace recently. Pakistan’s external debt and liabilities (EDL) surged to $50.9 billion in the first six months of current fiscal year (July-December) from $46.3 billion in end-June 2008 and total domestic debt has gone up to $38 billion equivalent while the government is going to request for an additional loan of $4.5 billion in April 2009, which will further push up our debt burden.

Mian Shaukat Masud said that borrowing internally or externally is not a bad habit because developing countries like Pakistan need to borrow for their economic development programs. However, he said that without developing debt-servicing capacity, increasing debt burden will adversely affect our development programs and will increase our budget deficit. He said borrowing, particularly from the external sources, should not be excessive and it should be kept within safe limits i.e. below 20 per cent of the GDP while our external debt and liabilities have gone up to 31.2 percent of projected GDP of current fiscal year that was 27.6 percent by end-June 2008 which is not good for the economy.

Business community was also perturbed over dwindling foreign investment which saw a decline of 34.2 percent in first eight months (July-February) from $2.873 billion to $1.89 billion while Large Scale Manufacturing (LSM) has shown a negative growth of 5.4 percent in first eight months of current FY against a positive growth of 5.2 percent for the same period of last year. They said these economic indicators signal further troubled times ahead. They said to improve the situation, government should increase its revenue collection and minimize its non-development expenditure.

ICCI President said instead of taking action on the aforesaid two fronts, government is making ruthless cuts its development spending, which will hard-hit its poverty-alleviation programs and expenditure on health, education and other social services. He said government has slashed the Federal component of Public Sector Development Program (PSDP) by Rs 118 billion on the plea of financial constraints while the country needs to increase its expenditure on PSDP for stimulating economic activities. He said time has now arrived that government should tax all those sectors of the economy which have remained untaxed so far to improve revenue collection. He said Pakistan needs substantial increase in revenue collection to avoid the debt trap and achieve self- reliance. He said if the government is serious in its desire to achieve self-reliance, avoid the debt trap and to acquire the capability to run the country without approaching the IMF continuously for support, then we will have to give up the habit of over-spending and learn to cut our coat according to our cloth.