PIAF expresses concern over rising external debt

Pakistan Industrial and Traders Associations Front (PIAF) has said that Pakistan's external debt was primarily increasing because of the government's inability to enhance exports and attract foreign direct investment. The PIAF chairman Irfan Iqbal Sheikh in a statement on Thursday warned the government that Pakistan is moving fast towards debt trap and might need another bailout package of International Monetary Fund (IMF), as the net public debt has crossed the Rs 18.28 trillion mark, rising about 35 percent during the tenure of present government.
Asking the economic managers to review their irresponsible borrowing behavior, he said the volume of net public debt as on September 30, 2016 was Rs 18,277.6 billion, as per the claim of the government. These loans were obtained for financing of projects of national importance, budgetary and balance of payments support, earthquake and floods, rehabilitation assistance and import of urea and crude oil. Another purpose of these loans was to build external buffers to protect against exchange rate volatility and absorb external shocks, he said.
Total public debt stood at Rs 13.48 trillion at the end of fiscal year 2012-13- almost three years ago. The major contribution to the increase in net public debt came from an almost 40 percent rise in domestic debt, which rose from Rs 8.686 trillion at the end of 2013 to Rs 12.14 trillion at the end of the first quarter of the current fiscal year. In the same period, foreign debt posted an increase of 28 percent and went from Rs 4.796 trillion in 2013 to Rs 6.14 trillion on September 30, 2016, he maintained.
Irfan Iqbal Sheikh said that Pakistan's debt situation demands critical attention as the country was taking loans to repay interest on increasing debt. He stressed the need for improving taxation system as main source of revenue generation. An effective taxation system would help reduce the debt dependency.
The government is leaving behind unprecedented external debt, creating troubles for the next government which would have to approach the international donors once again or to impose more taxes for retirement of huge debts, PIAF chief added.