Businessmen in a meeting at Islamabad Chamber of Commerce & Industry (ICCI) showed serious concern over country’s sliding into a serious debt trap as IMF has projected that Pakistan’s foreign debt and liabilities will surge to $ 72.6 billion by 2015-16 from its existing level of about $ 55 billion.  They said it will threaten the Pakistan’s debt sustainability.

Zahid Maqbool, President ICCI said already under IMF influence, government has enhanced the prices of electricity, gas and petroleum products significantly hiking cost of doing business and making our exports more uncompetitive in international markets.

He said that the massive rise in foreign debt will badly affect the macro and micro policies of the country and called upon the government to start devising indigenous strategies to prevent the country from falling into an unmanageable debt trap.

He said the government should take this matter seriously as the rising debt burden will adversely impact on governments efforts to develop economic and social infrastructure and maintain macroeconomic stability.

He said if this dangerous trend is not checked, it will retard the economic growth of the country, giving further rise to unemployment and poverty. He said the foreign direct investment has already declined in Pakistan by 52.2 per cent during the first five months of current fiscal year 2009-10 and huge rise in foreign debt will discourage more private investment in the country.

The businessmen said that while a judicious use of foreign debt could play an instrumental role in achieving accelerated development of a country, but unfortunately Pakistan did not use it aptly and optimally. As a result, the country has accumulated significant amounts of debt with not many benefits in terms of economic growth and living standards for the poor.

They said increasing levels of domestic and external debts could not be good for the country and for the welfare of its future generations unless these costly inflows are surpassed by visible benefits.

Zahid Maqbool said Pakistan is already making huge repayments in the shape of principal amount and interests as it paid about Rs.624 billion as interest to its domestic lenders while $4.345 billion was paid as principal cum interest to its foreign lenders in FY09 while the further rise in foreign debt will squeeze more financial resources, which could otherwise be utilized for the development of the country.

He said government should devise a safe exit strategy out of the menacing debt trap by increasing indigenous resources, for which there exist huge reservoirs in the shape of human capital, unexploited mineral deposits, hydel power potential, and huge agricultural and industrial potentials.