Senior Vice President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Shaikh Khalid Tawab urged the government to take all appropriate measures in order to strict implementation and compliance of Fiscal Responsibility and Debt Limitation (FRDL) Act, 2005 and to increase the revenue and rationalize current expenditures to reduce total public debt and improve the debt-carrying capacity of the country to finance growing development needs.
Expressing his serious concern over the rising of the public debt to GDP ratio of Pakistan, he said the Government is violating of FRDL Act which was passed in 2005. He further elaborated that it was decided in the act that Pakistan does not exceed its public debt 60 percent of GDP by 2013 which has increased to 66.47 percent of GDP in June 2016 and to reduce at least 2.5 percentage of GDP each year.
He stated that this is alarming for Pakistan that their public debt has reached to 66.47 percent of GDP (Rs 19.67 trillion) which was 63.8 percent of GDP (Rs 17.38 trillion) in 2015 as per the statistics of State Bank of Pakistan. Among this, 46 percent of GDP is government domestic debt while remaining is external debt. He added that despite the significant fiscal consolidation achieved in the fiscal year 2016 the public debt remains high which requires strong policy measures for declining the trend of domestic and external debt.
The Sr. Vice President FPCCI further stated that the high and rising debt constitute a serious threat to national security and sovereignty of Pakistan and may create impediments in business activities, investment, economic growth, poverty alleviation and employment generation. He further added that the debt needs to be serviced and at current levels the interest bill is larger than Pakistan's entire development budget. Moreover, higher debt servicing requires generating of higher revenue through taxes which would ultimately increase the cost of doing business. A rising debt burden has implications for the economy in term of greater amount of resources allocation towards debt servicing in the future and may costs in term of foregone public investment of the economy, he added.