2025: A roadmap to economic revival

Top 25 priorities for stabilising currency, driving growth, and reforming the economy

Listen to article

KARACHI:

Year 2025 has begun on an optimistic note. Notable economic indicators are showing the right upward trend, albeit increasing from a low base, but mean-reverting and heartening.

For calendar year 2025, Team Finance needs to clearly focus on the following top twenty-five priorities:

1. Keep the currency stable:

Not artificially, but by keeping a check on imports and maintaining a contractionary monetary policy while avoiding unwarranted consumption incentives for importing final non-economic value-adding goods.

2. Maintain double-digit interest rates: Yes, contrary to what top leadership aspires (including myself), we are just not there to push borrowing costs to single digits until inflation, exports, FDI, remittances, and tax collection are optimised.

3. Privatise something big (PIA?): PIA needs to go at any price closer to the reserve price of Rs85 billion. Apparently, the International Monetary Fund (IMF) has agreed to give tax concessions and park extra debt off the balance sheet. Do not give up easily—restart the process.

4. Discos privatisation: To win trust and fix the electricity mess, start outright privatisation and public-private partnerships for IESCO, GEPCO, and FESCO to hand over control of operations to the private sector.

5. Transfer provincial expenses: Overlapping federal expenditures on BISP, health, HEC, infrastructure, and development, along with losses from SEPCO, QESCO, HESCO, and PESCO, need to be handed over to provinces as soon as possible.

6. Tax retailers, agriculture, wholesalers, and traders: Let go of any political pressure for the sake of national security, and ensure these "dost" tajirs, feudal lords, middlemen, service providers, and agriculturists pay their fair share.

7. Irrigate more land: Aggressively divert water towards barren land to make it fertile and dedicate it to corporate farming for exporting value-added produce with high modern productivity and farm techniques to enhance exports and food security.

8. Reduce government jobs: Unwarranted political jobs in low grades and politically affiliated employment in government should be removed or offered voluntary retirement options to sustain the long-term viability of public service.

9. Digitise the tax machinery: The real problem lies with high taxation, harassment from officers, bribery, corruption, and the unfair cost of doing business. Tax collection should be simplified with call centres, government helplines, and facilitation centres.

10. Incentivise documentation: Tax on purchases via debit and credit cards at retail stores should be nominal for filers (check through QR) and higher for non-filers to reflect the underreported sales and profits of retailers, wholesalers, and traders.

11. Reward competent officers: Certain steps taken by the PM office are appreciated in rewarding honest officers who are curbing illegal trade, tax evasion, and criminal activities. Public officers need to feel financially over-rewarded to fix the system.

12. Minimise smuggling: While it may never be totally eliminated, punishing the chain involved in border smuggling of oil, tires, tiles, food, LPG, etc., which costs hundreds of billions to the exchequer and disrupts the moral fabric of society, is essential.

13. Penalise non-filers and late filers: Further increase taxes on non-filers and late filers to divert them towards the formal sector. Ensure the newly implemented law banning non-filers from buying houses, cars, and opening bank accounts continues for a decade.

14. Reduce corporate taxes: Companies listed on PSX or opting for IPOs should be rewarded with tax incentives for embracing a documented structure with professionally governed corporate frameworks for economic documentation.

15. SIFC accelerated investments: Increase the ambit to attract non-Arab country investments and resolve pending issues of K-Electric, Etisalat-PTCL, and refinery projects by conducting competitive bidding for agriculture, mining, minerals, and IT projects through a one-window operation for investors.

16. Crowdfund overseas Pakistanis' assets: When upgrading railway lines altogether, do it in the most modern way for high-speed railway and use instruments such as Naya Pakistan Certificates to offer 8-10% USD returns to overseas Pakistanis.

17. Incentivise IT exports: There needs to be a nationwide movement to train fifty million Pakistanis with basic computer skills for freelancing work through global platforms and offer a 10-20% rebate on export proceeds.

18. Promote innovation and entrepreneurship: The government should establish startup funds that co-invest a minimum of 10-25% in all VC investments in the country to spur a culture of business and leadership mindsets at an early stage.

19. Develop 100 IT universities: Instead of merely developing buildings, set up low-rent co-working spaces with in-house training facilities and education campuses to train at least 20,000-30,000 students annually with globally competitive skill sets.

20. Attract export-increasing/import-substituting FDI: Connect Pakistan with global capital and offer incentives only to players who reduce imports, grow exports, create high-value jobs, and transfer technology to Pakistan.

21. Avoid policy inconsistency: Whatever policy is provided should not be disrupted on an industry basis. The blame game and political tug-of-war must end to prioritise removing hunger, providing shelter, and ensuring peace.

22. Accelerate EV adoption: The true impact of EVs will be visible for two-wheelers with high returns on investment, quicker payback, improved environment, and imported fuel savings. Public buses should be converted to EVs to offer cheaper, safer, and environmentally friendly infrastructure.

23. Drill, baby, drill: Domestic state-owned oil and gas exploration companies should be aggressively mandated to reinvest all cash flows into exploring new gas and oil reserves, both onshore and offshore, to reduce import bills and enhance energy security.

24. Reform the real estate sector: Increase valuation tables to market value to ensure people declare their true wealth and pay taxes. Reduce transactional taxes to avoid a bribery culture and increase taxes on multiple incremental purchases to divert capital away from speculative investments.

25. Reduce salary taxes: Most Pakistanis will eventually have documented salaries, and the current higher 35-40% income taxes for levels considered minimum wages in developed economies will cause brain drain and widen the informal economy. Get the vote base right!

THE WRITER IS AN INDEPENDENT ECONOMIC ANALYST