Business leaders demand policy stability away from short-term fixes

Recent improvements in Pakistan's external finances have prompted a sort of guarded optimism among policymakers, but the business community believes the country still needs deeper structural changes to move towards durable economic growth.

Their concerns focus on policy continuity, high borrowing costs, slow investment and an export base that remains too narrow to support long-term stability.

According to Lahore Chamber of Commerce and Industry Senior Executive Committee Member Ali Imran Asif, the economy has entered a phase where temporary indicators often create the impression of long-term improvement. He noted that the rise in foreign exchange reserves, supported by strategic purchases and a reduction in forward liabilities, is encouraging, but does not yet reflect a shift in the underlying economic fundamentals. He added that the government must now look beyond short-term consumption-driven measures and long-term planning, meaningful engagement with stakeholders and a stable policy structure should become part of the national economic framework.

"We need to move from temporary stabilisation to long-term productivity. Policy continuity is essential if investment is to pick up," he said.

Asif pointed out that the achievement of a primary surplus for three consecutive years has contributed to fiscal discipline, yet private investment remains lower than needed. He attributed this to past episodes of sudden tax changes, mid-year policy adjustments and fluctuating economic signals that continue to affect the confidence of investors. "Businesses still recall earlier unpredictability and that history shapes decision-making," he said.

With Pakistan's population exceeding 250 million, Asif emphasised that the current growth of 3-4% cannot support the labour force or rising economic needs. He urged policymakers to recognise that sustainable growth will come only through higher productivity and stronger exports. "A country of this size requires a larger, more competitive export base. Without it, growth limitations will continue," he said.

He stressed that value addition and improved competitiveness should guide the government's approach to promoting exports. According to him, sectors with export potential should receive focused support until they become strong enough to operate without government assistance. "If export sectors gain stability, foreign exchange earnings will automatically improve, reducing pressure on reserves," he said.

Asif reiterated that high borrowing costs have become a major barrier to industries planning expansion or technological upgrades. He said the business community expects the State Bank to reduce the policy rate in its upcoming meeting, which will help revive industrial activity. An almost similar concern was recently echoed by State Bank Governor Jameel Ahmad, who said at a business event that Pakistan's current growth model cannot meet future economic needs and that local firms must increase their global competitiveness.

Adding to these views, Punjab-based textile exporter Nayyar Ali said the industry has the capacity to expand but requires greater predictability in government policies. He said the private sector could increase investment if it receives assurance that taxation rules, import procedures and energy pricing will remain stable for a reasonable period. "We can plan ahead only when we know the environment will not change unexpectedly," he said.

Ali added that exporting companies are facing delays in refunds and rising input costs, both of which affect their competitiveness in international markets. According to him, consistency in administrative processes is as important as consistency in policy. "Uncertainty raises costs and affects delivery timelines. Predictability helps maintain competitiveness," he said.

The concerns shared by the business community highlight a broader issue — while recent improvements in reserves, inflation and fiscal indicators signal progress, the economy requires structural reforms to maintain that progress. Business leaders believe the next set of decisions, particularly on interest rate, taxation and export facilitation, will play a critical role in determining whether Pakistan can shift towards a more stable and sustainable growth path.

Temporary stabilisation has created an opportunity, but it must be supported by policy continuity, export-focused planning and an investment-friendly environment. These elements will help determine whether current improvements evolve into longer-term economic stability or remain confined to short-term gains, Ali added.