ISLAMABAD: The International Monetary Fund (IMF) has urged Pakistan to move beyond macroeconomic stabilisation and pursue deeper structural reforms, including provincial tax mobilisation, governance improvements, energy-sector restructuring and measures to reduce the cost of doing business.
Speaking at the concluding plenary of the 29th Sustainable Development Conference, organised by the Sustainable Development Policy Institute (SDPI) on Thursday, IMF Resident Representative in Pakistan Dr Mahir Binici said the country needed to translate macroeconomic stability into higher investment, productivity and exports.
The session was titled “Where Reforms Matter the Most for Growth”.
Dr Binici said Pakistan had already undertaken the difficult task of restoring macroeconomic stability, but sustaining these gains would require consistent and well-sequenced structural reforms.
He outlined five key priorities: preserving macroeconomic stability, improving resource allocation, reducing the cost of doing business, developing a growth-friendly fiscal system and strengthening governance.
He said emerging and developing economies such as Pakistan needed to mobilise revenues equivalent to at least 15 per cent of gross domestic product (GDP) to build a strong state capable of delivering essential public services. Pakistan, however, remained considerably below this threshold.
He stressed that revenue mobilisation should extend beyond federal taxation, urging provincial governments to broaden their tax bases through harmonisation of general sales tax (GST) on services, agricultural income taxation and property taxes.
Dr Binici also called for better allocation of public resources, with greater spending on high-return infrastructure, healthcare, education and targeted social protection instead of inefficient and preferential activities.
Citing IMF research, he identified governance, national tariff policy and improvements in the business environment as three major areas where Pakistan could unlock significant growth potential.
He said high energy costs, taxation and multiple layers of taxes were discouraging businesses from retaining existing investments, undertaking new projects and attracting foreign direct investment.
Former federal minister Syed Naveed Qamar warned that consumers were increasingly turning away from the inefficient power system by adopting solar energy and other alternatives.
He said people had started “voting with their pockets” by installing solar systems rather than relying on the national grid.
Mr Qamar cited the shift of industrial consumers from gas to electricity as an example of flawed policymaking, saying industries had not moved to the national grid as anticipated. Instead, he argued, circular debt had effectively been shifted from the power sector to the gas sector without addressing the underlying inefficiencies.
Calling for deregulation and market competition, he said allowing more companies to enter the power market and compete could produce results more quickly than privatisation alone, which he described as a lengthy and difficult process.
He also warned that Pakistan could face renewed economic instability after the current IMF programme ends in September 2027 unless the government begins preparing a transition towards sustainable, growth-oriented policies.
Mr Qamar noted that only around 18 months would separate the expected conclusion of the programme from the next general elections, raising the risk of increased public spending and a reversal of economic discipline ahead of the electoral cycle.
Delaying the transition towards growth, he cautioned, could lead to a disorderly economic adjustment after the programme. He urged the government to use the remaining period to establish the institutional and policy framework needed for sustainable growth.
He also called for a fundamental overhaul of the education system, saying policymakers had focused excessively on enrolment figures and the number of out-of-school children while neglecting learning outcomes, practical skills and productivity.
The existing curriculum, he said, remained rooted in an outdated model designed primarily to produce clerical workers rather than a skilled and productive workforce.
Asian Development Bank (ADB) Country Director in Pakistan Dr Emma Xiaoqin Fan said consistent reform implementation, macroeconomic stability and private-sector-led growth were essential to break the country’s recurring boom-and-bust cycle.
She observed that Pakistan had experienced repeated economic expansions and crises since the 1990s without achieving significant improvements in per capita income, poverty reduction and public well-being.
Dr Fan said the government needed to clearly define the respective roles of the public and private sectors, stressing that economic growth could not be generated simply through increased government expenditure.
The government’s role, she said, was to create an enabling environment, ensure stability and act as a catalyst for private investment.
Citing the privatisation of Pakistan International Airlines (PIA), she said a single transaction could not transform the economy and that sustained progress across the broader reform agenda was essential.
She also called for civil service reforms to strengthen accountability, reduce unnecessary procedures and paperwork, and develop a more service-oriented approach within government institutions.
Dr Fan cautioned that reforms inevitably involved short-term political and economic adjustment costs, requiring governments to provide education, training and social protection to workers affected by restructuring.
Sam Waldock, Development Director at the Foreign, Commonwealth and Development Office (FCDO) at the British High Commission in Islamabad, identified export competitiveness as the key to overcoming Pakistan’s recurring growth ceiling.
He said the country’s economic growth repeatedly hit a ceiling of around 3.8 per cent because imports outpaced exports, creating balance-of-payments pressures and forcing Pakistan to return to the IMF.
Mr Waldock outlined 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 also highlighted shortcomings in export certification, documentation and branding, as well as the industry’s dependence on foreign intermediaries. Pakistan’s surgical instruments industry, he noted, lacked laboratories certified to facilitate medical-device exports to the European Union.
Pernille Ironside, Acting UN Resident Coordinator and UNICEF Country Representative, said the success of reforms should be measured by their tangible impact on people’s lives rather than policy announcements or financial allocations.
She called for outcome-based public spending, stressing that reforms must translate into schools where children actually learn, effective healthcare services and inclusive employment opportunities
