LAHORE: Pakistan is navigating a crucial phase in its economy, as it undertakes a three-year stabilization program backed by the International Monetary Fund (IMF) from 2024 to 2027. The program, now at the end of its first year, aims to address significant economic challenges, but experts at a recent conference emphasized the urgent need for corrective measures.
A primary concern is the management of Pakistan’s external debt, which stands at approximately $130 billion, or 23 percent of the GDP. The current IMF-supported strategy highlights external debt vulnerabilities but lacks focus on retiring $12 billion of debt subject to annual rollovers. The conference urged policymakers to retire this debt within the next four years, leveraging increased workers’ remittances to avoid dependency on subsequent IMF programs post-2027.
The stabilization program’s strategy has inadvertently led to disruptions in the productive sector, causing premature de-industrialization in major industries and impacting agricultural production. Experts noted the need for a transition strategy that protects existing sectors while fostering new, competitive industries and agricultural practices.
Urban development is also impacted under current policies. Property tax structures have shifted to land value percentages, discouraging investment in real estate and potentially leading to increased capital flight. The conference highlighted the necessity of reversing these policies to prevent further socio-economic disparity.
The privatization of public assets is concentrating wealth within approximately 100 families, who already control a significant portion of the Pakistan Stock Exchange. To counter this, a call was made for mandatory listing of large companies on the stock exchange to reduce wealth concentration.
Social protection policies under the stabilization program have proven insufficient, as poverty rates have surged to 40 percent. Experts proposed expanding coverage to encompass 20 percent of the population and increasing financial support to better address the growing poverty crisis.
Finally, the conference criticized the reluctance to embrace solar energy policies, which could alleviate dependency on imported oil and gas. A comprehensive approach to solar energy was advocated, including constitutional amendments to mitigate existing power generation investments and a ban on new dam constructions.
The conference underscored the importance of these strategic adjustments in guiding Pakistan’s economic future, with insights from prominent economists expected to shape forthcoming policies.