Criticality of country’s planning commission

Pakistan once had a development institution that looked beyond the next budget, the next political cycle and the next economic crisis. It was the brain power behind country’s strategic economic and social growth and infrastructure development.

The Planning Commission was created to give the country a strategic economic direction. It helped produce the Five-Year Plans that made Pakistan a development model in the 1960s. Today, its role has been progressively reduced to development-project appraisal and allocation of scarce public funds.

There was a time when Pakistan’s Planning Commission was among the country’s most influential economic institutions. It provided guidelines to Ministries on the country’s priorities and needs. Finance Ministry worked and country’s budgets were prepared on strategic guidelines provided by the Commission, balancing the economic and social obligations of the country towards its people.

Today, the Commission is requesting the government for a place in IMF negotiations. It is a reminder that Pakistan has lost something far more important: the capacity to think and plan beyond the immediate crisis. Pakistan does not need another plan. It needs to restore the institution capable of thinking strategically about its future.

Pakistan’s early planning experience attracted considerable international attention and became part of the development debate across Asia, including in countries such as South Korea.

The significance of that period was not simply the production of Five-Year Plans. It was the belief that a developing country could deliberately shape its economic future through disciplined planning, investment and institutional coordination.

That philosophy has progressively disappeared.

The decline of the Planning Commission was neither sudden nor the responsibility of one government. It was the cumulative consequence of institutional weakening, political intervention, fragmented economic policymaking and the growing dominance of short-term crisis management.

Over the decades, Five-Year Plans increasingly became documents rather than instruments of national transformation. Governments changed priorities, development projects were influenced by political considerations, implementation frequently diverged from planning, and the Commission became increasingly associated with project approval, monitoring and allocations under the Public Sector Development Programme.

The deeper problem was the separation of planning from policymaking and budgeting.

The Ministry of Finance attempted to assume much of the brain power of the planning commission. But consequent results show that the attempt did not work out. The prime reason being that the priorities move from strategic management to crisis management. The Finance Ministry became preoccupied with fiscal deficits, debt, taxation, foreign exchange and immediate balance-of-payments pressures. The State Bank focused on monetary stability, individual ministries pursued their sectoral agendas, and the Planning Commission increasingly operated within a fragmented system rather than providing an overarching economic strategy.

The consequences are visible across the economy.

Energy is a prime example. Pakistan repeatedly expanded generation without adequately integrating fuel security, transmission, distribution, affordability and demand growth into a coherent long-term strategy. The result has been excess generation capacity at times alongside expensive capacity payments, circular debt, unreliable supply and electricity that remains too costly for industry and households. A stronger strategic planning institution should have integrated energy security with industrial policy, exports and fiscal sustainability rather than treating each crisis separately.

Exports provide another example. Pakistan has repeatedly announced export targets and incentive packages without sustaining a long-term strategy for moving from low-value commodities and traditional products towards higher-value manufacturing, technology, services and globally competitive supply chains. Countries that successfully transformed their economies did so through sustained coordination of skills, infrastructure, finance, technology and industrial policy. Pakistan has too often changed direction before the previous strategy could mature.

The same weakness is evident in human capital. Education, vocational training, healthcare and workforce development have generally been treated as social-sector expenditures rather than as core components of economic strategy. Yet Pakistan’s future competitiveness will depend less on the size of its population than on the productivity and skills of its people.

This is what strategic planning is supposed to address.

Instead, Pakistan has increasingly moved from planning to firefighting. Structural problems are allowed to accumulate until they become crises, after which governments seek short-term remedies, frequently within an IMF programme.

This raises an important institutional question. IMF negotiations are principally led by the Finance Ministry, understandably because fiscal, monetary and balance-of-payments issues lie at the heart of such programmes. But IMF conditionalities increasingly reach far beyond these areas into energy, taxation, public investment, state-owned enterprises, subsidies and structural reforms.

The Planning Commission therefore has a legitimate role.

Planning ministry’s request to the Prime Minister for inclusion in IMF discussions should not be viewed simply as an institutional contest with the Finance Ministry. It highlights a larger deficiency in Pakistan’s economic governance: who represents the country’s medium- and long-term development interests when immediate financial stabilisation dominates the discussion?

The answer should be the Planning Commission—working alongside, not against, the Finance Ministry.

The Finance Ministry should continue to lead on fiscal and financial negotiations. But the Planning Commission should ensure that commitments made under an IMF programme are compatible with a national development strategy. Pakistan cannot permanently negotiate its economic future from one IMF programme to the next.

The answer is not to revive the old Planning Commission exactly as it was. It needs to be fundamentally rebuilt.

First, it should become the government’s principal institution for long-term economic strategy, developing a rolling 10–15-year national framework supported by five-year implementation plans and annual measurable targets.

Second, planning must become outcome-based. Every major national priority—exports, productivity, energy security, agriculture, industrialisation, technology, water, logistics, education, healthcare and skills—should have measurable objectives, financing requirements, timelines and clearly identified institutional responsibility.

Third, the Commission needs to recover its intellectual capacity. Leading economists, engineers, statisticians, technology specialists, social-sector experts and private-sector professionals should be recruited competitively. A strategic institution cannot be dominated by conventional bureaucratic thinking.

Fourth, planning must be linked directly to the budget. There is little value in identifying national priorities if annual budgets subsequently allocate resources according to short-term political or administrative pressures.

Finally, the Commission must have the authority and capacity to evaluate whether public investment actually delivers economic and social returns.

Pakistan does not suffer from a shortage of plans. It suffers from a shortage of strategic continuity, implementation discipline and institutional ownership.

The Planning Commission once represented the idea that Pakistan could shape its economic destiny rather than merely react to events. It lost that role gradually. Restoring it will require political ownership, professional independence and willingness to subordinate short-term expediency to long-term national interest.

The Commission should once again become the place where Pakistan decides not merely how to survive the next crisis, but how to build the economy that prevents the next crisis.

Copyright Business Recorder, 2026