Failed state: Ballooning debt proves alarming

KARACHI: Failure to improve exports or tax collection has increased domestic and foreign loans to the tune of Rs17 trillion, which is not sustainable, a business leader said Tuesday. Islamabad Chamber of Small Traders (ICST) Patron Shahid Rasheed Butt said the country’s total loans stood at Rs6.3 trillion in 2008, which are now three times more on which government paid Rs1.7 trillion as interest in 2015. Butt said interest on foreign loans amounted to Rs91 billion in 2014, which swelled to Rs110 billion in 2015, which speaks of increasing dependence on loans. “The government paid Rs3.12 trillion in last two years as interest on domestic loans, which are always costly than the foreign loans. Moreover, Rs3.5 trillion was borrowed in last two years from banks crowding out the productive sector which hampered economic activities, according to official figures. The government should focus on enhancing exports and tax net, and avoid borrowings. 60% of the population lives on less than two dollars a day and Pakistan stands third in illiteracy. The situation proves that extensive borrowing has not improved social indicators in the country.”

Published in The Express Tribune, September 2^nd,  2015.

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