The Pakistan Business Council (PBC) has acknowledged the economic stabilization achieved under the 2024 federal government but cautioned that the progress remains fragile due to five critical risks that could derail the gains made so far. In a post on X (formerly Twitter) on Thursday, the PBC credited the International Monetary Fund (IMF) program for shielding Pakistan from debt vulnerabilities and easing inflation through lower fuel costs.
The council noted that the IMF program provided much-needed relief by stabilizing the economy, reducing inflation, and enabling the government to achieve a primary fiscal surplus. This surplus was supported by the State Bank of Pakistan’s dividend and lower borrowing costs, which allowed the government to pay down expensive debt and ease concerns about domestic debt restructuring.
Investor sentiment also improved, as reflected in the performance of the KSE-100 index. However, the PBC warned that the stock market’s performance does not fully represent the broader economic reality, given its limited coverage of GDP and key sectors.
Five Risks to Economic Stability
Looking ahead to 2025, the PBC identified five major challenges that could undermine the progress achieved:
Sustaining Stability: The council warned that fiscal and monetary easing could reverse recent gains, as has happened during previous IMF programs. It urged the government to temper immediate growth ambitions to avoid triggering another balance of payments crisis.
Delaying Reforms: Privatization and government restructuring require cohesive leadership and coalition support, which remain uncertain. Delays in these reforms could stall progress.
Tax Revenue Deficits: The PBC highlighted the risk of failing to meet revenue targets, which could further burden existing taxpayers. It called for urgent reforms within the Federal Board of Revenue (FBR) to address systemic inefficiencies.
Energy Costs and Reliability: High energy costs and supply challenges continue to undermine manufacturing competitiveness and job creation, posing a significant risk to economic growth.
Trust Deficit: The strained relationship between businesses and the government, exacerbated by controversies such as the treatment of independent power producers (IPPs), risks deterring investment and partnerships.
Despite these risks, the PBC identified several opportunities for growth in 2025. Key sectors such as agriculture, cement, and IT have unused capacity that could drive growth without requiring additional imports or capital investment. Agriculture, in particular, holds significant potential for exports, food security, and rural development.
The council emphasized the need for reforms in tax policy, including levies on agriculture and property, as well as the empowerment of local governments. It also recommended improving the investment climate for local and multinational companies, renegotiating trade agreements for better market access, and right-sizing the federal government to enhance efficiency.
Path to Long-Term Transformation
The PBC concluded that sustained progress requires strong leadership, innovative ideas, and a departure from past practices. It stressed that long-term economic transformation will depend on the government’s ability to implement reforms, build trust with businesses, and address systemic challenges.
