Govt Panel Proposes Urgent Reforms to Prevent Return to IMF Program

A committee led by Planning Minister Ahsan Iqbal has called for urgent reforms to improve the ease of doing business and restructure tariffs, aiming to more than double Pakistan’s exports to over $60 billion within three years.

The body, constituted by the Prime Minister, identified policy unpredictability as a major factor undermining investor and buyer confidence across 20 priority export products.

The committee was formed to devise a strategy for avoiding another IMF programme once the current $8.4 billion arrangement expires at the end of 2027, amid mounting pressure from persistently weak economic indicators.

According to synopses compiled after week-long consultations with public and private sector stakeholders from January 5 to 9, the panel concluded that cross-cutting constraints are affecting all 20 priority export products and six export drivers.

The plan proposed easing electricity and gas prices through debt refinancing and rationalizing price build-ups. Export competitiveness is undermined by high and volatile energy costs, with electricity and gas tariffs remaining above regional benchmarks and subject to frequent changes, the committee found.

Volatility is inflating production costs across manufacturing, agro processing, minerals, fisheries and services, eroding margins and diverting orders to competing countries, it warned.

The Planning Commission pointed out that the cost of doing business in Pakistan remains structurally high due to fragmented and distortionary taxation, inverted input tariffs, advance income tax deductions, delayed sales tax refunds and persistent working capital lockups.

These issues disproportionately affect exporters and are particularly binding for small and medium enterprises across manufacturing and agri-based value chains, officials said.

The panel said frequent changes in tax policy, energy pricing, tariff structures, export incentives and regulatory regimes, often announced late in the business cycle, constrain forward planning, capacity expansion and scaling.

The synopses highlighted institutional fragmentation and regulatory burdens as major obstacles. Inconsistent definitions of SMEs across the State Bank of Pakistan, SMEDA, the Federal Board of Revenue and provincial authorities restrict access to finance, incentives and support schemes.

Overlapping mandates, discretionary enforcement, excessive audits and weak interagency coordination increase compliance costs and uncertainty, the panel said.

Exporters also face poor domestic quality, testing, and compliance infrastructure, increasing reliance on overseas laboratories for certification and testing. This raises costs, lengthens lead times and elevates rejection risks in regulated export markets, constraining movement into higher value products and destinations.

Limited access to affordable finance was highlighted as a constraint on upgrading and value addition. Export credit, insurance, guarantees and long term financing instruments remain underdeveloped, while high interest rates, collateral requirements and liquidity constraints curtail SME investment in technology, compliance and scaling.

The committee questioned the implementation of export facilitation and input schemes, saying procedural delays, higher input costs and working capital pressures are limiting effective sourcing of raw materials and intermediate inputs.

It cited logistics and trade facilitation bottlenecks, including high inland freight costs, underutilized rail, port congestion, slow customs clearance, inadequate cold chain infrastructure and weak courier and postal systems for SMEs.

At Port Qasim, the absence of dedicated export terminals, limited handling infrastructure, inadequate covered storage and constrained evacuation arrangements increases dwell time, handling cost,s and shipment uncertainty, the panel noted.

Skills gaps, low value addition and weak branding were identified as barriers to moving into higher value segments.

The Planning Commission is now collecting additional information through a private sector survey to refine inputs and develop a data-driven, sector specific technical roadmap to enhance exports under the Uraan Pakistan strategic plan.

“Pakistan’s development, economic sovereignty and even national security now hinge on one thing: how fast we can grow our exports and move to an export led growth model,” Iqbal said at the conclusion of consultations.

“The only way to break free from foreign crutches and avoid the next IMF programme is to rapidly increase our exports and build strong foreign exchange reserves,” he added.

The 20 products covered during engagements included copper, gems and jewellery, software and IT services, fish and fish preparations, rice, fruits and vegetables, meat and meat preparations, guar gum and its products, handicrafts, textile and apparel, sports goods, leather and leather products, surgical instruments, chemicals and pharmaceuticals, cement, carpets and rugs, engineering goods, footwear, plastic material and cutlery.

Pakistan currently exports about $30 to $35 billion worth of goods, against Planning Commission estimates of an untapped annual potential of over $60 billion.

The findings and recommendations will be consolidated into product-wise diagnostics and a targeted facilitation framework for submission to the Prime Minister. Their implementation would be subject to clearance under the tight requirements of IMF conditions.