President Islamabad Chamber of Commerce and Industry, Mian Shaukat Masud has said that International Monetary Fund's projection that Pakistan's external debt would reach $74 billion by 2015 should be a cause of serious concern for policy makers as it would have severe long-term direct and indirect negative impact on the economy.
In a statement issued here he said external debt rose by $11.7 billion in just two years ie 2007-09, as against $5 billion in seven years (2002-07), while the total foreign debt has gone up to $55 billion showing reckless indulgence of successive regimes in visionless borrowing, which needs to be curbed to save the coming generations from serious problems.
He said already the debt servicing burden has progressively reduced the government's ability to undertake much needed infrastructure development projects, and further rise in debt burden would hamper country's efforts for social and economic development.
ICCI President stressed upon the government to make strong fiscal adjustments instead of more borrowing otherwise, in coming years, debt problems will cause severe macroeconomic consequences like low economic growth, closure of businesses, rising unemployment and poverty, deterioration of physical and human infrastructure, high inflation, pressures on exchange rate, discouragement of both domestic and foreign private investment etc.
He said instead of resorting to foreign borrowing, government should take measures to reduce non-development expenses as nothing will work better than cutting the current expenditure and increase tax base by bringing in tax net those sectors that are enjoying tax base by bringing in tax net those sectors that are enjoying tax exemption to generate more revenues.
Moreover, government should encourage savings by offering better incentives and shake up National Savings Organisation to do more by linking up with the vast post office network to extend its mobilisations reach for non-bank savings.
He said the rising debt would also leave nothing for the private sector and contraction in credit for private sector would lead to further slump in business activities, ultimately causing shutting down of more business and industrial units and giving rise to unemployment and poverty. Therefore, government should pay serious attention to this problem to avoid its damaging effects on economy.
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