Growing debt threatens economy, say experts

LAHORE :Pakistan could be financially defaulted in coming year due to growing local and foreign debt and in such situation another IMF bailout programme will be unavoidable while country sovereignty and security could be at risk if debt volume increases to USD 90 billion as Pakistan’s economy is under $17 billion debt burden.

These views were expressed by experts in the Jang Economic Session on ‘Economic Situation – will Pakistan need to approach IMF again’. The panellists were Dr Ihsan Malik, Ansar Javeed, Dr Qais Aslam, Rabia Sultan, Ayesha Hamid, and Tayyab Ali Khan. The session was hosted by Sikindar Lodhi.

Dr Ihsan Malik said the IMF debt burden is a threat to country's independence. He said trade deficit was increased to $32 billion from $20 billion and debt services to $11 billion. He said pledging national assets such as motorways, airports and others are deplorable. He urged the economists to resolve the problems; otherwise, nuclear assets are also at stake. He said that benefits of GSP Plus status and declined petroleum prices were not achieved. He believed that hopes with CPEC should not be high with existing economic situation.

Ansar Javeed said future concerns are increasing due to administrative and economic crisis so early decisions are crucial. He said political instability is the biggest crisis. He said there is a need to remain conscious against enemies' designs because they are conspiring to weaken Pakistan on internal and external levels. He demanded effective taxation system instead of ad hoc policies. He said burden on existing taxpayers is increasing while no policy is being chalked out for stable tax policy. He said hundi is being promoted due to difference between inter-bank and open markets exchange rates.

Dr Qais Aslam said Pakistan’s economy is under $17 billion debt burden and annual growth rate is 4.5 percent, manufacturing sector growth rate is 5.3 percent with GDP share of 13.5 percent, agriculture growth rate 5.3 percent with GDP share of 19.5 percent. He said performance of both important sectors is disappointing while services sector dependent on imported material was performing. He said all indicators are pushing for another IMF programme. He called for withdrawal of subsidies from public housings, vehicles, VIP security instead of agriculture and industry.

Rabia Sultan said foreign debt has become oxygen for Pakistan’s economy but it has to decide for how long country’s economy will sustain on artificial oxygen. She said in the past too loans were taken on strict conditions but not utilised for economic development while economic realities were not shared with public in the last two budgets. She believed that without reducing cost of production economy growth is impossible.

Ayesha Hamid said Pakistan’s taxation system is very weak and ineffective which negatively affecting revenue collection and economy. She said only 10 percent people pay taxes while industrial sector was ignored in successive government while US has become super power due to corporate sector growth. She believed that dependency on the IMF will continue if security and tax collection issues are not resolved.

Tayyab Ali Khan said real picture of economic condition is far different from the depicted by the government. He said Pakistan needs to approach another IMF programme next year due to trade deficit and debt burden. He said the IMF debt putting burden on commoner while economic issues are not on the government priorities radar. He believed that CPEC projects cost is on the rise due to security costs of Chinese workers on these projects.