The Pakistan Business Council (PBC) believes that the primary purpose of any reforms in Pakistan should be to improve the quality of life of its people. A policy framework that maximizes the potential of business to contribute to the country’s upliftment is a means, not an end. The resultant improvement in human capital will create the conditions for business to thrive. Pakistan lags South Asia in virtually every social measure. The second important objective is to restore its solvency and autonomy which has been affected severely by recurring external and fiscal account deficits, leading inevitably to the 24th IMF Programme. Last, but not the least important, is the need to create resilience to climate change. We saw how the recent floods of biblical proportion disrupted life.

Investment in social development will entail mobilization of substantially higher resources and cutback in nondevelopment public expenditure. This in turn will call for significant reforms in the country’s tax system, fundamental changes to stem the build-up of energy circular debt, courageous restructuring and privatization of state-owned enterprises and the right-sizing of the civil service. Without reliable supply of energy at a competitive cost, it is unrealistic to expect industry to create jobs, grow exports and for the country to become less reliant on imports. The country has prematurely de-industrialized. Pakistan’s share of world exports has declined, the export basket is narrow, as is the geographical dispersion. Security uncertainty is leading to rationing of orders by overseas customers. Value-addition is low and exports lack pricing power.
Energy availability and cost is also a factor in manufacturing for the domestic market. Cascading import duties and limited time, performance-linked incentives for import substitution need to be considered to help balance the external account. However, this cannot be allowed to indefinitely impact consumer choice and value. Realistic, market-based exchange rates will support the external account.

The country’s agriculture potential remains unrealized, with the result that our growing population is threatened by food insecurity and inflation, whilst at the same time imports are increasing and the exports are below potential. Population growth and urbanization is leading to encroachment of agricultural land, as also, undermining most other socio-economic development parameters. The investment climate is poor, with FDI and local investment on hold, awaiting transformation of business environment and positive feedback from existing investors.

Pakistan’s economic policies are at the best unpredictable; sound planning and good alignment between stakeholders for sustainable and inclusive growth is over-ridden by short-term, knee-jerk, revenue-seeking changes that undermine confidence. Federal ministries are fragmented, often pursuing conflicting and silo objectives. There is also fragmentation between the federation and provinces. The current National Finance Commission Award needs to be reviewed to achieve a more optimal sharing of resources and responsibilities. Pakistan’s debt obligations cannot indefinitely be left unaddressed.

Though Pakistan’s emission levels are low, it is amongst the most vulnerable to climate change. So an incoming government would need to accord climate change mitigation and adaptation the highest priority. In a rapidly evolving digital world, Pakistan needs to reposition itself in a global economy in which cheap labour will not be a sustainable competitive advantage.

The incoming government will also have a challenging task to continue on the work of the caretaker government to stabilize the economy. It would also need to reprofile debts, negotiate the 24th IMF Programme and undertake painful, but essential reforms. The first two to three years of its tenure should be spent on economic stabilization, tackling decades-high inflation and carrying out deep reforms. Uncertain geopolitical environment will not make this task easy. Business too will need to play a positive role by reducing reliance on state patronage and become externally focused and competitive. Changing the status quo of the economy is far too important to be left entirely to government, especially if state control and interference is to be reduced.

“We have yet to see any political party’s clear economic agenda. These recommendation are for their consideration.

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