Karachi, March 01, 2016 (PPI-OT): The President FPCCI Abdul Rauf Alam has shown serious concern over lenient attitude towards implementation and compliance of Fiscal Responsibility and Debt Limitation Act 2005 which ensures financial discipline in the economy and restricts the government ability to borrow from banking sector. He further stated that several negative externalities of external borrowing create irritants in the economy and the burden of repayments shifted to the forthcoming generations.
Rauf Alam said that the unplanned and high growth in outstanding debts both domestic and external ultimately damage the business activities in the country. He said that the outstanding debt have arrived at more than 62% of GDP while the cost of debt servicing is more than 40% of public expenditures due to higher level of outstanding debts. He mentioned that higher debt servicing cost requires to generate higher revenue through GST, direct taxes and other levies which ultimately increase the cost of doing business.
The President FPCCI further stated that the government can borrow money from public at high rate of interest which ultimately hampers the ability of commercial banks to lend for investment and industrialization at lower interest rate. He said that the private sector cannot afford high cost of debt financing which can be offered by the government. Because the business sector has to pay the cost of debt from their profits while the government pay the interest by increase in the taxes on private sectors.
Rauf Alam further said that FPCCI supports strict implementation of the Fiscal Responsibility and Debt Limitation Act 2005 to disciplines the economy and improve prudence in the economic system. He said that this act was legislated by the parliament in 2005 but neither government is taking it serious nor any voice from the opposition on its implementation.
For more information, contact:
M. A. Lodhi
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
B-1, Federation House, Main Clifton Road,
Tel: +92-21-35873691, 93-94