Increasing foreign debt and debt servicing are adding more problems to our ailing economy which was suffering with the lowest growth rate in the region.

Increasing level of external debts was not good for our country and for our future generations Mahfooz Elahi, President Islamabad Chamber of Commerce & Industry (ICCI) has said, addressing the business community at ICCI. 

He was reacting to the reports that Pakistan is paying about $3 billion on debt servicing annually. As Pakistan’s present foreign debt of $54 billion continued to increase, debt servicing will increase by the same ratio.

ICCI President said that external debt was a heavy burden on the country and in 2009, the country owed $50 billion and the government consumed a third of its budget revenues to honor only interest payments of the country, where 60% of people live below the poverty line.

Elahi further said that economic situation was getting worse as Pakistan’s total debt-to-GDP ratio has crossed 61 percent this ongoing fiscal year, breaching the 60 percent limit set under the Fiscal Responsibility and Debt Limitation Act.

He suggested that Pakistan can create a safe exit of debt trap by increasing her indigenous resources, for which there exist huge potential in shape of its human capital, unexploited mineral deposits, hydel power resources, and huge agricultural and industrial potentials.

Elahi said that external debt will keep rising unless we don’t go for economic rival through monetary management because slow economic growth coupled with non-development expenditures and monetary mismanagement were pushing Pakistan deeper into the debt-trap.

ICCI President said that external debt could be avoided through development of new dynamic exports along with a modern industrial sector, domestic savings, self reliance and balanced macro policies.

He urged the government to finance fiscal deficit through creation of money rather than borrowing from abroad. Government should enhance some fiscal and monetary policies to overcome the external debt repayment for the upcoming years which was hampering economic development of Pakistan, he opinioned.