Foreign direct investment should be top priority, says economist

KARACHI: Anything or everything related to foreign direct investment should be the top priority instead of relying on loans/ grants to keep the wheel moving, said, Ateeq ur Rehman, economic & financial analyst.

He was commending on a news item “Central Bank is widely expected to cut its key interest rate next week by 100/ 200 bps after holding it at a record 22 percent for seven straight policy meetings”.

He said the business community is expecting 400 to 500 bps cut; reason being the huge borrowing cost which always reflects the increase in expenditure after mark-up payments.

He said the debt is unsustainable and so are the big interest rates. We are a debt-oriented country and face acute economic challenges due to paucity of resources and huge financial losses.

In order to cover financial losses, the government borrows heavily from local banks, international/ multilateral/ bilateral lenders on heavy interest rates, thus increasing the size of actual loan, he said. “For the fiscal year 2024 -25, our external financing requirement is from $21 to $23 billion; consequently it will have detrimental impacts of enormous interest rates.”

Copyright Business Recorder, 2024