Increase in debt burden alarming, warn experts

Jang Economic Session

LAHORE: Increase in debt burden is alarming as the majority of loans are being spent on non-productive sectors while overall performance of the economy is not too much disappointing while the issue is economic priorities.

These views were expressed by the experts in Jang Economic Session on ‘realities of debt burden on the economy’. The panellists were Dr Qais Aslam, Javeed Kiyani, Saad Akbar Khan, Agha Syedain, and Pervaiz Hanif while hosted by Sikandar Lodhi. 

Dr Qais Aslam said that productive loans for development projects are good but national sovereignty should be kept in sight while increasing the debt burden. He said limit of debts was fixed at 60 percent of GDP while Pakistan had reached 67 percent due to which 40 percent of budget was spent on debt servicing instead of education and health. He believed that situation could be worsening if timely actions were not taken to increase exports and human resource, and control imports. He called for construction of dam and water storage along with infrastructure to ensure water availability for agriculture. 

Javeed Kiyani said that overall situation of Pakistan had improved, stock market was growing, law and order was improving and rank of country was improving to do business, so IMF had forecast GDP growth from 4.5 percent to 4.7 percent and World Bank 5.4 percent by 2018. He said debt burden was growing due to insecurity to local and foreign investors. He called for peace, industrialisation, investors’ confidence steps to bring bank investment to country by appointing competent officials in commerce ministry and other institutions who could handle the crisis.

He demanded incentives for the export sector, besides focusing on promotion of agriculture and industry for employment generation.  Saad Akbar Khan said, foreign debt burden volume is $74.1 billion which distorted the economic situation while economic policies should be reformed according to the need of the time. He said the government rather than spending on infrastructure should invest on agriculture and industrial sectors for employment generation. He said it was very difficult for private sector to get loan from the commercial banks.

He called for revisiting the policies to increase the exports.  Agha Syedain said that total debt burden until June 2016 was Rs17.78 trillion out of which Rs6.05 trillion was foreign component, Rs11.78 trillion local. He said repayment of $6.6 billion IMF loans, $12 billion Paris club, CPEC loans and Sakuk and Euro bonds in 2018 would create trouble for economy. He called for increasing exports by $38 billion to rescue the economy. He said investments in non-productive projects, and spending on luxuries should be stopped. He said the government financial experts did not accept the foreign debt figures while it was growing annually at 6.3 percent rate.

Pervaiz Hanif said that getting loans for economic needs was not a surprising thing as US was also largest loan taking country in the world but the important aspect is the loans should not be taken for the repayment of loans only but for spending on productivity projects.

He said economic situation was critical due to crossing the debt limit. He said if the government did not include the private sector loans in debt burden then it should not include its remittances into national remittance. He suggested the government make public the facts about debt burden as exports are declined to $20 billion from $25 billion. He called for value addition and effective marketing to increase exports.