Ayesha Saba

Pakistan should seek a longer-term, reform-centric IMF program instead of the previous short-term programs. By prioritizing structural changes, inclusive development, and transparent governance, Pakistan can break free from the cycle of short-term solutions and embark on a journey toward sustained economic growth and prosperity. Shahray Jawaid,  Senior Research Analyst at the Pakistan Business Council, told WealthPK that Pakistan has a history of entering into short-term agreements with the IMF to address its immediate balance of payments crisis. While these programs often provide a temporary relief, they tend to focus on quick fixes rather than addressing the fundamental structural issues. As a result, the country finds itself in a cycle of recurring economic challenges. “The call for sectors to stand on their own feet without relying on exemptions and subsidies is a significant paradigm shift. The industries that have long benefited from these privileges must now prepare for a transition to self-sustainability. This transition is not merely an economic necessity but a pragmatic response to the evolving global economic landscape,” she said.

She lamented that the state-owned enterprises (SOEs) have often struggled with inefficiencies, mismanagement, and financial losses, which contributed significantly to the economic burden on the nation, diverting resources that could be better utilized for productive purposes. “The road to 2028 will be long and tough. Achieving an ambitious growth target of 5 percent will require steadfast political will, consistency in policy reforms, and innovative policy solutions to enhance productivity, revenue, and financing,” she said. Renowned Economist and Vice-Chancellor Pakistan Institute of Development Economics Dr Nadeem-ul-Haque told WealthPK that Pakistan has been in crisis for the last 75 years. It is a matter of concern that Pakistan has to go to the IMF again and again when it is just an emergency ward, i.e., a lender of last resort to pull the countries out of financial crisis. He pointed out that Pakistan has not made a concrete economic policy during this long period, but other regional countries, such as India, have devised a sound economic policy to steer the country’s direction.

Leading economists emphasize the importance of structural reforms that target key sectors of the economy. Dr Nadeem called for Pakistan to shift its focus from short-term stabilization measures to comprehensive structural reforms. This includes addressing issues in taxation, governance, and the energy sector to create an environment conducive to a sustainable economic growth. According to the latest statement by the IMF, macroeconomic conditions have generally improved, with 2% growth expected in FY24 as the nascent recovery picked up pace in the second half of the year. The fiscal position also strengthened in FY24Q1 achieving a primary surplus of 0.4% of GDP driven by overall strong revenues. The Executive Board of the IMF completed the first review and approved immediate disbursement of SDR528 million (around US$700 million), bringing the total disbursements under the SBA to US$1.9 billion.

Credit: INP-WealthPk