ISLAMABAD - The Pakistan Economy Watch (PEW) on Sunday said foreign and domestic debt has been climbing sharply to an all-time high but it is still in manageable limits. The country's total debt stocks have jumped to over Rs26.5 trillion but the government has the ability to tackle it, it said. The government is facing larger economic challenges such as repaying mounting foreign debt amid rapidly declining foreign currency reserves necessitating vital reforms, said Dr. Murtaza Mughal, President of PEW. The debt burden has touched alarming proportions due to the relentless borrowing by the former government, unabated imports, sliding exports and other factors but it will not bankrupt the country, he added. He said that foreign exchange reserves are under pressure while repayment of loans will eat up a large portion of government earnings which can be countered through good growth rate and enhanced exports. Dr. Murtaza Mughal said that the former governments added billions of dollars the external debt which should be tackled urgently.

He said that current account deficit has touched worrying proportions while the imports have added to the ballooning deficit.

The country would need to bridge the trade gap for which a loan of eight billion dollars is required from the IMF.

He said that country can avoid another loan from IMF to bridge deficit if it undertakes serious reforms without further delay.