Big firms urge IMF policy certainty
The government has agreed to the need for a mini-budget if revenues fall short of expectations by end-December 2025, according to the IMF. Photo: file
Pakistan's top conglomerates on Thursday urged the International Monetary Fund (IMF) to ensure predictability and a long-term view of economic policies, while the visiting mission chief underscored the need for phased economic growth instead of accelerating the pace abruptly.
The large firms also demanded that the IMF allow time-bound tax and other incentives to revive exports, which have dropped by more than 7% during the first seven months of the current fiscal year. Representatives of around one-and-a-half dozen top corporations, including foreign-origin and local firms, met the Iva Petrova-led IMF mission on the Fund's second day in Pakistan.
The mission is on a two-week visit to review the country's performance and largely expressed satisfaction with progress, barring concerns related to taxation and energy. The exchange, held under the platform of the Overseas Investors Chamber of Commerce and Industry (OICCI), reflected frustration among businesses, particularly over taxation and energy policies, according to participants. However, the IMF pressed for a cautious approach to addressing these challenges.
The IMF mission arrived a week after an official report showed poverty in Pakistan at an 11-year high, unemployment at a 21-year high, and income inequality at a 27-year high. The government has attributed these outcomes to the IMF programme and recent policy changes.
Business leaders urged the IMF that the country should not be run on a day-to-day basis and must have a long-term plan, multiple participants told The Express Tribune.
They complained about high taxes, expressed concerns over the super tax, salaried class tax and high corporate taxes, and called for a reduction in energy costs. Participants also emphasised early privatisation of power distribution companies to eliminate inefficiencies.
One participant said the mission chief indicated that the IMF was reviewing the recently implemented captive energy policy and that some changes might be introduced.
One conglomerate complained about undue taxation consuming nearly 90% of its total profits, while another flagged impediments to exports.
Participants said they also discussed the adverse impact of growing tax evasion, which is making it difficult for the formal sector to compete with non-tax-paying segments.
However, Petrova acknowledged that broadening the tax base would take time, said one participant, adding that the failure of the Federal Board of Revenue (FBR) was also a failure of the IMF and World Bank, which continue to extend loans with their eyes closed.
Business representatives urged the IMF to move beyond fiscal stabilisation, but the mission chief reiterated the need for phased economic growth to avoid past mistakes.
While both sides appreciated improvements in monetary policy transmission, conglomerates criticised what they termed a directionless fiscal policy.
There was also discussion on allocating federal funds to trained workers going abroad to ensure better wages.
An OICCI handout said discussions focused on Pakistan's economic outlook and the perspectives of foreign investors. OICCI President Yousaf Hussain acknowledged progress in macroeconomic stabilisation, citing stronger fiscal consolidation, improved primary balance discipline, a stabilised external account, moderating inflation and a resilient financial sector.
While recognising these gains, Hussain said the priority was to transition from stabilisation to a phased but sustained export-led growth path. He stressed the need for a centrally coordinated, technocrat-supported and well-sequenced medium-term reform programme under a comprehensive National Economic Plan.
Secretary General OICCI M Abdul Aleem highlighted Pakistan's geo-economic potential, calling for greater policy coherence, predictability and investment-focused regulatory improvements. He emphasised stronger incentives for export-led industrialisation and pointed to structural flaws in the tax system, including a narrow base and a disproportionate burden on the documented and compliant sector.
To restore competitiveness and investor confidence, Aleem called for a rationalised tax and tariff regime, avoidance of retrospective taxation, timely clearance of refunds, simpler compliance and stronger documentation and enforcement across the economy.