PBC Warns of 5 Key Risks That Could Reverse Economic Progress Made in 2024

The Pakistan Business Council (PBC) has acknowledged the economic stabilization achieved under the 2024 federal government but also discussed five key risks that could topple all progress made thus far.

In a post on X on Thursday, the council credited the International Monetary Fund (IMF) program for shielding Pakistan from debt vulnerabilities and easing inflation through lower fuel costs.

These factors brought temporary relief to the public and contributed to a primary surplus in the fiscal account. The surplus was supported by the State Bank of Pakistan’s dividend and a decline in borrowing costs, enabling the government to pay down expensive debt and reduce concerns about domestic debt restructuring.

While the KSE-100 index reflected positive investor sentiment, the PBC cautioned that it does not accurately represent the broader economic reality due to its limited coverage of GDP and key sectors.

Looking ahead to 2025, the PBC identified five critical challenges:

1. Sustaining Stability: The council warned against the risk of fiscal and monetary easing reversing gains, as has occurred during previous IMF programs. Immediate growth ambitions should be tempered to avoid triggering a balance of payments crisis.
2. Delaying Reforms: Privatization and government restructuring require cohesive leadership and coalition support, which remain uncertain.
3. Tax Revenue Deficits: Failure to meet revenue targets could further burden existing taxpayers, with systemic issues within the Federal Board of Revenue (FBR) needing urgent reform.
4. Energy Costs and Reliability: High energy costs and supply challenges undermine manufacturing competitiveness and job creation.
5. 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.

PBC also highlighted several opportunities for growth in 2025. Key sectors like agriculture, cement, and IT have unused capacity that could drive growth without additional imports or capital investment. Agriculture, in particular, holds potential for exports, food security, and rural upliftment.

To sustain fiscal stability, the council emphasized reforms in tax policy, including levies on agriculture and property, coupled with the empowerment of local governments. Improving the investment climate for local and multinational companies, renegotiating trade agreements for better market access, and right-sizing the federal government were also recommended.

The PBC concluded that sustained progress requires strong leadership, innovative ideas, and a departure from past practices to achieve long-term economic transformation.