The Pakistan Business Council (PBC), the country’s leading corporate advocacy platform, highlighted five major issues that must be addressed to ensure the continuity of the newly gained economic stability.
“Notwithstanding the disputed political mandate, regaining economic stability was a notable achievement of the current government in 2024,” the PBC said, in a statement on social media platform X on Thursday, while sharing its perspective on Pakistan’s economic trajectory.
The council highlighted that the inking of a new long-term programme with the International Monetary Fund (IMF) in July “shielded the country from debt vulnerability, while commodity tailwinds, especially in fuel cost and the resulting reduction in inflation provided some relief to the masses”.
PBC said that while the formal sector’s tax burden increased after the budget, its cost of borrowing declined.
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Meanwhile, the country’s current account benefited largely from rising remittances and reduced demand for imports.
“The SBP dividend and lower cost of borrowing enabled the government to record a primary positive balance on the fiscal account and pay down the more expensive debt,” it said.
Looking ahead to 2025, PBC highlighted five major issues requiring redressal.
“Firstly, on four previous occasions, Pakistan’s economy has enjoyed relative stability in the first year of a new IMF program, only to see it reversed as monetary and fiscal easing triggered import-based demand which led to balance of payment crises,” PBC said, advising both the government and business to curb their appetite.
“The second danger is delaying major reforms,” it said. “Not only does the government need the full support of its coalition partners, it has to resolve internal conflict and project a clear and united leadership on privatization and right-sizing of the government.”
“The third concern is failure to meet the tax revenue targets, resulting in further burden on existing taxpayers, including the salaried employees,” PBC noted, adding that the FBR needs to better address its approach to taxpayers.
“The fourth major issue is energy - its cost, availability and reliability. Without these, manufacturing will remain uncompetitive and employment depressed,” it said.
Lastly, the government needs to address the trust deficit it shares with the business community.
“The extrajudicial treatment of Independent Power Producers (IPPs) does not augur well for local or foreign investment, nor for public-private partnerships. The private sector is, after all, the engine of growth,” PBC said.
Moreover, PBC emphasized utilizing existing unutilized capacity in various sectors without needing new capital investment or imports.
It also called for taxing agriculture and property, along with empowering local bodies.
“There is a real potential to build on the stability and this will require unambiguous leadership, strong commitment and room for fresh ideas and people. Repeating the previous practices will not result in radically different results,” it concluded.
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