Former President of Islamabad Chamber of Commerce and Industry (ICCI) Dr. Shahid Rasheed Butt on Sunday said the government’s economic performance is not satisfactory as it continues to prefer politics to economy.
The popular policies can push the country to further economic mess and the threat of default is snowballing as the economy is passing through one of the toughest periods in the country’s history, he said.
Shahid Rasheed Butt said that a large external financing gap, a challenging global situation, devastating floods, and political instability have increased the risk for the country.
The uncontrollable current account deficit is coming down after currency devaluation and other tightening measures, the biggest worry is external repayments amid declining foreign exchange reserves, he added.
Shahid Rasheed Butt said that Pakistan’s external debt repayment obligations are $73 billion in three years and when it is compared to prevailing foreign exchange reserves of $7-8 billion all we get is worries.
External debt and liabilities have doubled in seven years from $65 billion or 24 percent of GDP to $130 billion or 40 percent of GDP due to irresponsible borrowing.
Presently Pakistan’s total debt and liabilities have increased from Rs19.9 trillion to Rs60 trillion as of June 2022 which is 90 percent of GDP, he informed.
Pakistan must exploit friendly relations with China and seek IMF-led debt restructuring of at least $30 billion or the situation will go out of control, he warned.
The government should try to enter into a new IMF programme to avert a default, he said.
Under the new IMF programme along with debt restructuring, the country will likely witness strict monetary, exchange rate, and fiscal policies but we have no other option, he said.
The country’s economic growth will remain slow, the rupee will remain under pressure, and the interest rate will remain at higher levels despite due to IMF’s involvement.
If the debt is not restructured immediately, Pakistan’s debt crisis could worsen further, which could hamper Pakistan’s ability to pay back on time, he warned.
