ISLAMABAD  -  The Islamabad Chamber of Small Traders on Sunday said the country would need almost $9.25 in debt repayments during the current fiscal which would be a challenge.

The amount needed to pay foreign debts and interest is almost equal to the forex reserves held by the central banks warranting foreign loan to keep the country afloat, it said.

Serious efforts are needed to control imports otherwise the deficit can jump to $25 billion making it very difficult for the government to manage, said Patron Islamabad Chamber of Small Traders Shahid Rasheed Butt.

Increasing interest rates will be a hard decision as it will start contraction in the economy at this critical juncture, he added.

Shahid said that the tested recipe for controlling deficit has remained a cut in the developmental spending. However, the government can explore the option of jacking up the slab of 20 percent to 30 percent on imports.

This revision will not only discourage imports but save foreign exchange and add around Rs250 billion in the revenue reducing the deficit.

He said that the proposal for an increase in income tax should not be accepted as it will trigger evasion and corruption as the former government had already added over one trillion rupees to the burden on taxpayers.

The business leader said that the new government should push its reform agenda without considering opposition by defeated elements as the masses and the business community is with it. Rejected elements who have cheated masses for long cannot mislead the masses anymore.

Earlier,  the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) had suggested increase in import duties on unnecessary imports and imposition of 100 percent L/C margin on preventable imports to improve the balance of payments situation.

The government had already taken some laudable steps to restrict unnecessary imports to rescue the depleting foreign exchange reserves and curtail widening deficits, but more measures to cut imports have become imperative, the FPCCI said.

The FPCCI said that imports must be reduced, which jumped to $52 billion during the last fiscal year, while exports dropped to $21 billion, which is a huge gap that calls for more measures.