Debt trap

Both Prime Minister Imran Khan and Abdul Hafeez Shaikh (advisor to the PM on finance and revenue) frequently claim that their administration has been paying huge interest annually against the loans borrowed by the previous governments. I agree with this statement. However, at the same time, I say that the federal government has also borrowed a lot from international donors/agencies such as the IMF during the last two years. Have the prime minister and his financial team realized that after the completion of his tenure, the next federal government in the year 2023 (if it is other than the PTI) would also be paying a huge amount of interest on the loans that the current government took upon during its current tenure? Then, that government, too, will face the same challenge. Hence, a vicious circle of payment of interest on international loans will remain a permanent feature.

To get rid of the menace of foreign borrowings, it is necessary that our financial planners in Islamabad create a balance in our yearly expected revenues and corresponding yearly expenditure. In other words, our yearly expected expenditures should align with our expected yearly revenues. When our expenditure exceeds our expected revenues, our governments resort to international borrowing to meet that shortfall; and here arises the real problem. To generate more revenues and growth in our economy, the federal government needs to strengthen the industrial sector, enhance agricultural productivity, gradually increase net taxes, improve the balance of trade, encourage foreign investments and lower interest rates. These measures will result in more job opportunities, more investment, and a stable rate of inflation.

Abdul Samad Samo

Karachi