IMF representative urges deeper reforms and provincial revenue mobilisation in Pakistan

ISLAMABAD (Nazrana Times): International Monetary Fund (IMF) Resident Representative in Pakistan Dr Mahir Binici has urged the country to move beyond macroeconomic stabilisation and pursue deeper structural reforms, including provincial revenue mobilisation, better governance, energy-sector restructuring and lower business costs.

He was speaking on Thursday at the closing plenary of the 29th Sustainable Development Conference, organised by the Sustainable Development Policy Institute (SDPI). The session, titled “Where Reforms Matter the Most for Growth”, examined the changes needed to support sustained economic growth.

Binici said Pakistan had undertaken the difficult task of restoring macroeconomic stability, but preserving those gains required well-sequenced and consistent structural reforms. Stability, he said, must translate into higher investment, productivity and exports.

Five priorities for reform

The IMF representative identified five priorities: preserving macroeconomic stability, improving resource allocation, reducing the cost of doing business, developing a growth-friendly fiscal system and strengthening governance.

He said emerging and developing economies such as Pakistan needed to mobilise revenue equivalent to at least 15 per cent of gross domestic product to build a state capable of delivering essential public services. Pakistan remained considerably below that threshold, he said.

Binici stressed that revenue mobilisation should extend beyond federal taxation. He urged provincial governments to broaden their revenue bases through harmonisation of general sales tax on services, agricultural income taxation and property taxation.

He also called for better allocation of public resources, with greater spending on infrastructure offering strong returns, healthcare, education and targeted social protection rather than inefficient activities or preferential arrangements.

Energy costs and multiple taxes constrain investment

Citing IMF research, Binici identified governance, national tariff policy and the business environment as three areas where reforms could unlock significant growth potential.

He said high energy costs and multiple layers of taxation discouraged businesses from maintaining existing investments, undertaking new projects and attracting foreign direct investment.

Consumers are moving away from the power system: Qamar

Former federal minister Syed Naveed Qamar said consumers were increasingly leaving Pakistan’s conventional electricity system through solar adoption and other alternatives. He argued that the shift reflected frustration with the existing system as well as technological progress.

Qamar said policymakers were attempting to preserve an outdated and inefficient system by transferring its financial burden to other consumers instead of addressing its structural weaknesses. He called for urgent deregulation, greater competition and permission for more companies to enter the electricity market.

He also questioned policies intended to shift industrial consumers from gas to electricity, saying industries had not moved to the national grid as anticipated. In his assessment, gas companies had lost paying customers while their payment problems had grown.

He argued that circular-debt pressures had effectively shifted from the electricity sector to the gas sector without resolving the underlying inefficiencies.

Qamar said deregulation and market competition could deliver faster results than privatisation alone, which he described as a lengthy and difficult process.

Preparation urged for transition beyond IMF programme

Qamar warned that Pakistan could face renewed economic instability unless the government began preparing for sustainable, growth-oriented policies beyond the current IMF programme. He referred to its expected conclusion in September 2027.

He estimated that around 18 months would separate the programme’s completion from the next general elections, creating a risk of increased public spending and weaker economic discipline ahead of the polls.

He urged the government to use the remaining programme period to establish the institutional and policy framework needed for a managed transition towards growth.

Qamar also called for a fundamental overhaul of education. He said policymakers had focused heavily on enrolment and out-of-school children while giving insufficient attention to learning outcomes, practical skills and productivity. He described the curriculum as rooted in an outdated model geared towards clerical employment rather than developing a skilled, productive workforce.

Private-sector-led growth essential: ADB

Asian Development Bank Country Director for Pakistan Dr Emma Xiaoqin Fan said consistent reform implementation, macroeconomic stability and private-sector-led growth were essential to break Pakistan’s recurring boom-and-bust cycle.

She said the country had experienced repeated expansions and crises since the 1990s without substantial improvements in per capita income, poverty reduction and public well-being.

Fan urged the government to clarify the respective roles of the public and private sectors, saying higher government spending alone could not generate sustained growth. The government’s role, she said, was to create an enabling environment, ensure stability and encourage private investment.

Referring to Pakistan International Airlines’ privatisation, she said a single transaction could not transform the economy. Consistent progress across the broader reform agenda was necessary.

She also called for civil-service reforms to strengthen accountability, reduce unnecessary procedures and paperwork, and make institutions more service-oriented.

Fan acknowledged that reforms involved short-term political and economic adjustment costs. Governments, she said, needed to provide education, training and social protection for workers affected by restructuring.

Five priorities for export-led growth

Sam Waldock, Development Director at the Foreign, Commonwealth and Development Office at the British High Commission in Islamabad, identified export competitiveness as central to overcoming Pakistan’s recurring growth constraints.

He said growth repeatedly reached a ceiling of around 3.8 per cent as imports outpaced exports, triggering balance-of-payments pressures and renewed reliance on the IMF.

Waldock identified five priorities: regulatory reform, trade facilitation, trade promotion, market-oriented skills development and improved access to foreign exchange for exporters.

He highlighted shortcomings in export certification, documentation and branding, alongside dependence on foreign intermediaries. He said Pakistan’s surgical-instruments industry lacked the certified laboratories needed to facilitate medical-device exports to the European Union.

Reform success must be measured through people’s lives

Acting UN Resident Coordinator and UNICEF Country Representative Pernille Ironside said reforms should be judged by their tangible impact on people’s lives rather than policy announcements or financial allocations.

Calling for outcome-based public spending, she said reforms must deliver schools where children actually learn, effective healthcare services and inclusive employment opportunities.