ISLAMABAD: Pakistan must pursue consistent structural reforms, private-sector-led investment and export diversification to break its recurring boom-and-bust cycle, while honouring policy commitments and avoiding frequent changes in key government officials to ensure continuity in economic policymaking, Asian Development Bank (ADB) Country Director in Pakistan Dr Emma Xiaoqin Fan said on Thursday.
She warned that decades of economic expansions and crises had failed to deliver significant improvements in per capita income, poverty reduction and people’s living standards, stressing that sustained reforms and institutional stability were essential to unlock the country’s economic potential.
Speaking at the closing plenary of the Sustainable Development Policy Institute’s (SDPI) 29th Sustainable Development Conference on “Where Reforms Matter the Most for Growth”, Fan said macroeconomic stability alone could not deliver sustainable development unless accompanied by a business-friendly regulatory environment, institutional reforms, improved human capital and sustained private-sector investment.
She said Pakistan, with a population exceeding 250 million, around two-thirds of whom were below 30 years of age, substantial agricultural resources and a strategic geographical location, possessed enormous economic potential that remained largely untapped.
Fan stressed that macroeconomic stability was the foundation of sustainable growth and required prudent fiscal and monetary management, even if this meant sacrificing some short-term, demand-driven expansion.
She said sustained economic growth over the next 10 to 20 years was essential to bring meaningful improvements in living standards, adding that the government needed to clearly define the respective roles of the public and private sectors.
“The business of the government is not business,” she said, arguing that the government’s responsibility was to establish an enabling environment, ensure stability and act as a catalyst for private investment rather than directly undertake commercial activities.
She cited the privatisation of Pakistan International Airlines (PIA) as an important example of reform, but cautioned that one privatisation deal could not transform the economy. Consistent implementation of reforms across different sectors was necessary to bring lasting qualitative change.
The ADB country director emphasised that reform commitments needed to be translated into actual implementation, warning against frequent changes in policies and government officials that could undermine institutional capacity and disrupt ongoing initiatives.
She called for greater continuity in economic policymaking, saying reforms required sustained commitment and consistent execution rather than repeated changes in direction.
Stability in key institutions and the officials responsible for implementing reforms was important to ensure that agreed policies produced results.
She also called for civil service reforms to improve accountability, reduce unnecessary procedures and paperwork, and establish a more service-oriented approach within government institutions.
Fan said businesses faced high regulatory and compliance costs at every stage, from registration and establishment to operations and exports. Pakistan needed to translate its macroeconomic vision into a business-friendly operating environment capable of attracting domestic and foreign investors.
She further emphasised the importance of women’s economic participation, noting that women constituted around half of the country’s population and represented a significant but underutilised component of the labour force.
Sam Waldock, Development Director at the Foreign, Commonwealth and Development Office (FCDO), British High Commission Islamabad, identified export competitiveness as the central requirement for breaking Pakistan’s recurring economic growth ceiling.
He said Pakistan’s economic growth repeatedly reached a ceiling of around 3.8 percent because imports expanded faster than exports, generating balance-of-payments pressures and eventually forcing the country to seek another IMF programme.
Referring to similar cycles in 2008, 2018 and 2022, he said the external shocks differed, but the underlying problem remained insufficient foreign exchange earnings.
He said countries that achieved income growth exceeding 7 percent annually over a sustained period of around 15 years had generally increased their exports by approximately 10 percent each year.
Waldock identified five priorities for export-led growth: regulatory reforms, trade facilitation, trade promotion, market-oriented skills development and improved access to foreign exchange for exporters.
He highlighted weaknesses in export certification, documentation, branding and dependence on foreign intermediaries, noting that Pakistan’s surgical instruments industry lacked internationally certified laboratories needed to facilitate medical-device exports to the European Union.
He also pointed to a serious mismatch between educational qualifications and private-sector requirements.
Although IT exports had increased 21 percent last year to Rs1.27 trillion, industry consultations suggested that only one in 10 IT graduates were considered employable.
The British representative reaffirmed the UK’s long-term commitment to supporting Pakistan’s economic reforms through debt-free grants and technical assistance.
He said the tariff reforms currently being undertaken by Pakistan were particularly encouraging and could play an important role in improving export competitiveness, reflecting concerns repeatedly raised by the private sector.
He stressed that reforms required continuity despite short-term economic and political costs, adding that the UK intended to remain engaged with Pakistan over the longer term.
PernilleIronside, Acting UN Resident Coordinator and UNICEF Country Representative, stressed that the success of economic reforms should be measured by their tangible impact on people’s lives rather than policy announcements or financial allocations.
She said federal and provincial governments faced difficult choices amid limited public resources, requiring better prioritisation and stronger links between public financing, institutional responsibilities and service delivery.
The United Nations, she said, was providing advisory support and technical expertise to help governments make effective choices within existing financial constraints.
Ironside called for outcome-based public spending, emphasising that reforms should deliver schools where children actually learn, effective healthcare services and inclusive employment opportunities.
She said Pakistan’s young population represented enormous potential, but this demographic advantage could only be converted into economic and social progress by expanding access to quality education, decent work and equal opportunities.
She added that the UN remained ready to work with the government, private sector and development partners to promote decent employment, gender equality and inclusive development.
Copyright Business Recorder, 2026