PBF urges govt for urgent steps towards economic reforms

KARACHI: The Pakistan Business Forum (PBF) has urged the government to take immediate steps towards economic reforms to ensure long-term stability and sustainable growth for the country.

PBF Karachi President, Malik Khuda Baksh, emphasised the critical need for persistent, sound economic management in light of the ongoing challenges facing Pakistan’s economy.

Speaking at PBF general body, Khuda Basksh stressed that the country’s economic future hinges on implementing structural reforms aimed at enhancing the Ease of Doing Business (EoDB) environment and boosting foreign investment. He warned that relying heavily on external borrowing would not restore economic stability in the long run.

“The high cost of doing business is eroding the competitiveness of Pakistani industries, discouraging investment in both capacity and capability. To address this, we need to overhaul the regulatory environment, ease the burden of taxes, and make power tariffs more competitive,” said Khuda Basksh.

“The constant increase in electricity prices, particularly under the fuel adjustment mechanism, is further exacerbating the already high cost of trade and industry. This has made the energy sector a major barrier to economic growth, and we need urgent reforms to alleviate this burden.”

Khuda Baksh also pointed out that the government’s recent agreement with the International Monetary Fund (IMF) for a 37-month loan, the 25th of its kind since 1958, would provide short-term relief, but structural reforms were essential for long-term sustainability. While the government has hailed the deal as a step toward stabilising the economy, economic analysts caution that much more needs to be done to address the root causes of Pakistan’s fiscal challenges.

“Pakistan’s growing debt burden, which requires $90 billion in repayments over the next three years, remains a major concern,” Khuda Basksh said.

“While the IMF deal will provide breathing space, a strategy centered on continuous borrowing and rollovers will not bring sustainable solutions to our financial problems. The government must focus on fiscal discipline, structural reforms, and reducing dependency on external borrowing.”

The PBF Karachi chief also highlighted Pakistan’s status as the IMF's fifth-largest debtor, with over $7 billion owed as of September 25, 2024. He emphasised the need for political consensus on key reforms, including tax reform, energy tariff adjustments, and market-driven currency policies.

“Political stability and a unified approach to reform are critical if Pakistan is to achieve lasting economic recovery,” he stated.

In addition, Malik called on the Ministry of Power to take urgent steps to address system constraints and improve transmission infrastructure, which he said could help reduce electricity shortages and costs for consumers. He urged the government to expedite the completion of ongoing power projects and to implement business-friendly policies similar to those adopted by neighboring countries in the region. “Pakistan’s current energy tariffs are among the highest in the region, which is a major impediment to industrial growth and exports.

By providing affordable electricity, we can reduce production costs and make our industries more competitive on the global market,” he added and further criticised the extensive foreign borrowing undertaken by previous governments to meet local expenditure, which has further increased Pakistan’s foreign debt.

He urged the government to focus on improving Pakistan’s ranking on the Ease of Doing Business Index to attract both foreign and local investment and to foster high economic growth.

Copyright Business Recorder, 2024