Islamabad: A high-level committee constituted by the prime minister and led by Minister for Planning, Development and Special Initiatives Ahsan Iqbal has called for urgent structural reforms to improve the ease of doing business and rationalise energy tariffs and trade duties, warning that without decisive action Pakistan risks returning to another International Monetary Fund (IMF) programme.
The committee was tasked with formulating a strategy to avoid a fresh IMF loan once the current $8.4 billion IMF arrangement expires at the end of 2027, amid persistent economic weaknesses. Its goal is to more than double Pakistan’s exports to over $60 billion within three years, from the current level of around $30–35 billion.
Based on week-long consultations with public and private sector stakeholders held from January 5 to 9, the panel concluded that Pakistan’s existing economic framework is incapable of delivering sustained prosperity to a rapidly growing population of nearly 250 million. The synopses noted that cross-cutting constraints are affecting all 20 priority export products and six export drivers, undermining competitiveness and growth.
Although many of these challenges are long recognised, the report pointed to the government’s continued inability to create a fair, transparent, rule-based and predictable business environment, despite initiatives such as the Special Investment Facilitation Council (SIFC). As a result, economic growth has remained confined to stabilisation under restrictive IMF-led programmes rather than transitioning to a sustainable expansion path.
A major concern highlighted by the committee is high and volatile energy costs. The panel proposed easing electricity and gas prices through debt refinancing and rationalisation of price build-ups, noting that current tariffs remain above regional benchmarks and are subject to frequent changes. This volatility, it warned, is inflating production costs across manufacturing, agro-processing, minerals, fisheries and services, eroding profit margins and pushing export orders towards competing countries.
The Planning Commission also flagged the structurally high cost of doing business, driven by fragmented and distortionary taxation, inverted input tariffs, advance income tax deductions, delayed sales tax refunds and persistent working capital lock-ups. These issues disproportionately burden exporters, particularly small and medium enterprises (SMEs) across manufacturing and agri-based value chains.
Policy unpredictability was identified as another major deterrent to investment and buyer confidence. Frequent and late-cycle changes in tax policies, energy pricing, tariffs, export incentives and regulatory regimes were said to constrain forward planning, capacity expansion and scaling, especially during annual export order booking cycles.
Institutional fragmentation and regulatory overlap further compound these challenges. The committee noted that inconsistent definitions of SMEs across the State Bank of Pakistan, SMEDA, the Federal Board of Revenue and provincial authorities limit access to finance, incentives and support schemes. Overlapping mandates, discretionary enforcement, excessive audits and weak inter-agency coordination were cited as factors increasing compliance costs and uncertainty.
The report also highlighted weaknesses in quality, testing and compliance infrastructure, forcing exporters to rely on overseas laboratories for certification. This, it said, raises costs, prolongs lead times and increases rejection risks in regulated markets, restricting movement into higher-value products.
Limited access to affordable finance remains a key constraint on upgrading and value addition. Export credit, insurance, guarantees and long-term financing instruments are underdeveloped, while high interest rates, stringent collateral requirements and liquidity pressures discourage SME investment in technology, compliance and expansion.
Logistics and trade facilitation bottlenecks were also flagged, including high inland freight costs, underutilisation of railways, port congestion, slow customs clearance, inadequate cold-chain facilities and weak courier and postal systems for SMEs. At Port Qasim, the absence of dedicated export terminals, limited handling infrastructure and constrained evacuation arrangements were found to increase dwell time, handling costs and shipment uncertainty.
In response, the Planning Commission is now gathering additional inputs through a private-sector survey to develop a data-driven, sector-specific technical roadmap under the Uraan Pakistan strategic plan, aimed at accelerating export growth.
“Pakistan’s development, economic sovereignty and even national security now hinge on how fast we can grow our exports and move to an export-led growth model,” Ahsan Iqbal said at the conclusion of the consultations. “The only way to break free from foreign dependence and avoid the next IMF programme is to rapidly increase exports and build strong foreign exchange reserves.”
The committee’s findings and recommendations will be consolidated into product-wise diagnostics and a targeted facilitation framework for submission to the prime minister, with implementation subject to compliance with existing IMF conditionalities.
Story by Khaleeq Kiani
