LAHORE - The business community has said that high trade deficit along with the massive debt burden is the toughest challenge for the country despite several achievements of the government, including huge foreign reserves, better GDP growth rate, low inflation, speedy infrastructure development and reduction in power tariff.

The people were finding it hard to believe the government declaration in respect of high GDP growth rate and increase in foreign exchange reserves because they were finding it hard to make both ends meet on account of unchecked increase in cost of living, they observed.

They predicted that the country is rapidly heading towards severe debt trap as the country’s external debt is projected to swell up to $110 billion till 2020, posing threatening situation having no option but to go back to the International Monetary Fund (IMF) to avoid default.

Lahore Chamber of Commerce and Industry (LCCI) former vice president Kashif Anwar said that the country has recently said goodbye to the IMF after successful completion of 36 months Extended Fund Facility (EFF) but the doomsday scenario must cause alarm bells because economists projection were mainly based upon stagnant exports which would continue hovering around $25 billion by 2020. With increasing exports and maintaining reasonable pace of remittances, the country can avoid its woes on front of external accounts, he suggested.

Anwar said that due to low level of exports, the country’s external debt to export ratio has been projected at 441.8 percent by 2019-20, which is highly unsustainable. He observed that the country might consume 40 percent of its export earnings just to service the external debt by 2020.

He said the people would accept the government claims on economic growth and prosperity only when their problems would be solved and the essential commodities and utilities would be available at fair prices. The government should ensure availability of electricity, gas, diesel and water to industry and agriculture at low rates to facilitate reduction in prices of foodstuffs and industrial products, he added.

He said the government should pay special attention to poverty alleviation and job creation because class hatred was likely to increase on account of growing poverty and unemployment. The government should also promote the culture of simplicity to discourage the race for acquiring wealth.

He said the government should allocate funds for starting work on at least one big dam in the forthcoming budget to generate cheap hydle power for agriculture and industry.

He said that the country’s debt burden, internal and external, during the last 10 years has been increasing at an alarming rate, as total debts as on June 30, 2016 reached Rs22.459 trillion against Rs19.846 trillion on June 30, 2015, showing a monstrous increase of Rs2.61 trillion pushing debt-to-GDP ratio to 75.9 percent.