Businessmen show concern over rising debt burden

The debt has reached a critical level of more than US$105 billion by end of financial year 2010.

ISLAMABAD: Businessmen have shown great concerns over the rising public debt of Pakistan, which has reached a critical level of more than US$105 billion by end of financial year 2010 out of which external debt is more than $55 billion and stressed for developing a viable debt management strategy to reduce country’s over-reliance on external and domestic borrowings.

Chairing the meeting Zahid Maqbool, President, Islamabad Chamber of Commerce and Industry (ICCI) said that high expenditures of the government are pushing the country into a debt trap as Pakistan’s total debt-to-GDP ratio has crossed 61 per cent by the end of fiscal 2010 breaching the 60 per cent limit set by the government under the Fiscal Responsibility and Debt Limitation Act.

He said there is an urgent need for a debt management strategy that should reduce government’s over-reliance on borrowings, decrease cost of debt servicing and create substantial space for development.

Maqbool said the most worrying factor is that the mounting debt is causing hefty outflow of foreign exchange as Pakistan has paid a staggering amount of $5.6 billion on debt servicing during the last fiscal year, which was 43 per cent of the official foreign exchange reserves.

Published in The Express Tribune, August 14^th, 2010