Islamabad Chamber of Commerce & Industry (ICCI) has shown great concerns over rising domestic debt which rose by Rs.773 billion during the first eleven months of current fiscal year from Rs.3,860 billion to Rs.4,633 billion as per data released by SBP and termed it a dangerous trend because it will jeopardize the growth of private sector.

Mr.Zahid Maqbool, President, Islamabad Chamber of Commerce & Industry in a statement urged the government to avoid reckless borrowing from  banking sector and develop an indigenous strategy to generate revenue from internal resources as its massive borrowing from banks is crowding out private sector from credit and hiking inflation in the country.

He said IMF has recently projected Pakistan’s external debt to rise to $74 billion by 2015-16 from current $ 55 billion which clearly shows that the country is heading towards a situation where new loans will be needed to pay off the old ones.

Mr.Zahid Maqbool said Pakistan is required to pay back $8.321 billion to the IMF in the next three years (2011-12 to 2013-14) and wondered how the country will manage to retire this big amount at a time when its expenditures are on the rise while revenue falling far short due to indiscipline fiscal approach of the government. This state of affairs predicts more grim scenario for business environment in coming days, he added.

He said rising debt burden constitutes a serious threat to the development of the economy as it causes macroeconomic instability and hampers growth, job creation and poverty alleviation.  It also makes credit more costly for entrepreneurs which in turn discourages new domestic and foreign investment in private sector.

He said Pakistan has already paid a heavy price for financial indiscipline and will continue to pay it in the coming years unless government makes a paradigm shift in financial governance to improve fiscal discipline, controls all unnecessary & non-developmental expenditures and seriously adopts austerity measures.

He said government should cut down its borrowing from banks and create more space private sector credit so that it could make new investment, expand economy, create jobs, promote exports and increase country’s tax revenue.