Industry blames constant rise in debt for poverty, lack of development

ISLAMABAD: The Islamabad Chamber of Commerce and Industry (ICCI) has voiced grave concern over a constant increase in Pakistan’s foreign debt that has swelled more than 41% over the past four years.

It has called on the government to pay attention to generating domestic resources in order to lessen heavy reliance on foreign debt as its growth would further hike the cost of debt servicing and restrict economic growth of the country.

In a statement, ICCI President Sheikh Amir Waheed pointed out that Pakistan’s foreign debt, which had stood around $60.9 billion in 2013, went up to $85 billion by September 2017, showing an increase of over 41%.

He blamed the constant rise in debt levels for poverty and under-development as Pakistan was spending about 65% of its revenue on debt servicing.

After debt repayment, the country is left with insufficient financial resources for spending on defence, health care, education, development and private sector credit.

Waheed was of the view that further accumulation of foreign debt would weaken the economic future of Pakistan as the debt would consume a major portion of future budgets, leaving meagre resources for economic development.

He pointed out that Pakistan’s foreign debt had been just around $3 billion by December 1971, but over the past 46 years, the debt level registered a phenomenal increase of over 2,700%.

“It clearly shows that successive governments have contributed to make Pakistan one of the highly indebted countries as economic growth never matched with the consistent rise in foreign debt,” he remarked.

He underscored the need for reorienting economic policies and focusing on domestic resources for development of the country.

Senior Vice President Muhammad Naveed and Vice President Nisar Mirza cautioned that if the trend of counting on foreign debt to run the country’s affairs was not curbed, Pakistan would have to obtain more loans even for debt repayment.

They said the continued rise in foreign debt would squeeze funds for private sector credit, affect industrial and investment activities, increase poverty and unemployment and impede economic development.

They suggested that the government should focus on creating an enabling environment for better growth of business and investment activities and facilitate the promotion of exports.

Published in The Express Tribune, January 6th, 2018.

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