Finance Minister Muhammad Aurangzeb’s claim at an Islamic finance conference that Pakistan is on a trajectory of stability and growth after overcoming its economic challenges rings hollow in light of the country’s underlying structural issues. While it is true that Pakistan has managed to stave off an economic emergency — thanks largely to two consecutive IMF bailouts worth $10 billion and billions in rolled-over foreign loans — the optimism conveyed seems disconnected from the realities of the short- to medium-term outlook.
The current stability is largely superficial, driven by IMF-mandated reforms and temporary financial relief rather than substantial policy innovation. The stock market’s record-breaking performance and the improvement in macroeconomic indicators reflect improved market sentiments but offer little reassurance for sustainable economic recovery. The absence of a credible, long-term economic strategy beyond IMF targets casts doubt on the government’s ability to achieve robust growth without risking yet another balance-of-payments crisis.
Pakistan’s reliance on external financing, primarily from friendly nations such as China, Saudi Arabia, and other Gulf states, underscores the lack of self-reliant economic planning. These allies have provided crucial lifelines in times of crisis, but even their support is finite. Without a comprehensive reform strategy outside the IMF framework, the country will remain trapped in a vicious cycle of borrowing and debt repayments, with no meaningful progress in reducing poverty or creating jobs.
Curbing the fiscal deficit must be a cornerstone of any long-term growth agenda. Expanding the tax net by targeting untaxed and under-taxed sectors, eliminating exemptions for powerful lobbies, and ensuring strict tax compliance are critical steps that the government has so far hesitated to take. Simultaneously, reducing wasteful public expenditures and accelerating the privatisation of inefficient state-owned enterprises could significantly ease fiscal pressures.
Beyond fiscal measures, the government must prioritize creating a predictable business environment free from sudden policy shifts and burdensome regulations. Attracting private investment is crucial to enhancing industrial and agricultural productivity, which, in turn, would boost non-debt-creating export revenues. Local and foreign investors must be treated equitably, with clear incentives to contribute to long-term growth.
Equally important is fostering an ecosystem conducive to innovation and human capital development. This requires investments in education and health to equip the workforce with skills that align with technological advancements. Independent courts and transparent governance are also indispensable to earning the trust of both citizens and investors.
Ultimately, the government must acknowledge that firefighting is not a substitute for governance. Stability born of external bailouts and promises of foreign investments is fragile and fleeting. Until Pakistan’s policymakers commit to systemic reforms and take ownership of the country’s economic future, the mirage of growth and stability will continue to evaporate before reaching fruition.
