PBC advocates long-term reforms in IMF negotiations
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When the new government will prepare to negotiate the 24th programme with the International Monetary Fund (IMF), the Pakistan Business Council (PBC) has emphasised the need for long-term and reform-focused agreements. In its agenda for the incoming government, the PBC rejects short-term conditionality-laden programmes and urges a commitment to sustainable reforms.
The PBC’s agenda underscores the economic challenges facing Pakistan and asserts that external aid is not a reliable solution. Rather than relying solely on outside assistance, the council suggests achieving revenue goals through measures such as increasing energy tariffs and enhancing tax collection from taxpayers. Notably, the agenda stressed the importance of deep reforms in the energy sector and highlights debt profiling as crucial to alleviating default concerns and restoring confidence.
The document makes it clear that the new government must address economic issues without providing extensive concessions. The PBC advocates for limited direct subsidies through the Benazir Income Support Fund, underscoring that subsidised industries should strive for self-sufficiency.
Competitive energy tariffs are identified as essential for reviving the local industrial sector, with the agenda calling for the removal of underlying defects. To address the current account deficit, the PBC recommends increasing export volume rather than relying on temporary measures like restricting imports.
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The promotion of value addition in Pakistan is seen as a key strategy for enhancing competitiveness and expanding exports. The agenda stresses the importance of investing in vocational training to boost workforce productivity, given the significant population growth and the lowest workforce strength in South Asia.
The agenda highlighted the inevitability of expanding the tax net, but it cautioned against burdening taxpayers excessively. Instead, it encourages a focus on reducing debt dependence through judicious cuts in non-development expenditures and efficient use of development expenditures.
Provinces levying property and agricultural taxes are suggested to receive concessions in the National Finance Commission (NFC). The agenda recommends the closure or sale of loss-making public institutions, arguing that the country can no longer afford their financial drain. Additionally, the private sector is urged to prioritise international markets over domestic ones and invest in sectors like agriculture, mining, tourism, and import-reducing projects.
Finally, the agenda highlighted the perennial challenge of ensuring food security for a growing population and its impact on the trade deficit. Pakistan’s status as a food-importing country necessitates strategic investments in seeds, technology, finance, and cold chain storage to ensure a sufficient and affordable food supply—an essential component for any robust economic indicator.
Published in The Express Tribune, January 3rd, 2024.
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