The national debate on diverse approaches or strategies to achieve sustainable and inclusive economic growth has intensified with greater clarity on how long-term stability is linked to improving productivity and competitiveness across all sectors of the economy.

Similarly, all stakeholders need to be taken on board and actively help evolve a common minimum programme and action plan for the correction course.

On a positive note, Finance Minister Muhammad Aurangzeb said on Nov 30 that the government was making a decisive shift towards an inclusive, private-sector-driven and export-led growth model. Earlier, he told a Pakistan Business Council (PBC) event that the policy focus was shifting towards steady, sustainable growth that could break recurring boom-and-bust cycles.

Expecting a “good” National Finance Commission output, he said both the federation and the provinces would have to contribute to enhance revenue mobilisation to run the country sustainably. “You cannot run the country on an eight to 10 per cent tax-to-GDP ratio.”

In another PBC session, Special Assistant to the Prime Minister on Industries and Production Haroon Akhtar Khan said exports must grow faster than imports to ease pressure on the economy and secure long-term stability. As for now, the trade deficit has further widened by 37pc to $15.5 billion in 5MFY26.

International collaboration aside, Pakistan must create an ecosystem where experimentation is rewarded, and ideas can move freely between universities, firms, and the market

A stronger export performance requires support for manufacturing and local production, adding that producing key inputs such as steel domestically is necessary to expand export capacity. Pakistan should strengthen domestic investment before relying on foreign investors. Faster economic progress, he said, is needed to create employment.

According to the Labour Force Survey 2024-25, the number of unemployed individuals surged from 4.5 million in FY21 to 5.9m in FY25.

A crucial lesson learnt was that foreign direct investment will only follow once local investors are engaged, acknowledged the National Coordinator of the Special Investment Facilitation Council, Lt Gen Sarfraz Ahmed, in a meeting with the PBC held later on Nov 2.

On Dec 3, Prime Minister Shahbaz Sharif reportedly issued instructions to take up a tax relief proposal for the corporates and salaried class with the International Monetary Fund; the proposal suggests a Rs975bn income-tax relief package.

‘The private sector should also pursue partnerships and joint ventures abroad, technology transfer, and knowledge exchange to improve productivity and competitiveness at home’

Furthermore, the Competition Commission of Pakistan (CCP) and the Federal Antimonopoly Service of the Russian Federation have signed a memorandum of understanding to enhance bilateral cooperation in the field of competitive policy. According to a CCP statement, “It was a significant step toward deepening institutional coordination, promoting fair market practices, and strengthening economic ties between the two countries.”

In a related development, China promises to extend a helping hand more comprehensively. “We will promote the inclusion of more Pakistani agricultural products under contract farming cooperation and facilitate the export of more high-quality agricultural products to China. Furthermore, we will continue to support industrial park cooperation, making new and greater contributions to Pakistan’s export expansion and foreign exchange earnings,” says Chinese Ambassador Jiang Zaidong.

But, international collaboration aside, Waqar Wadho, Associate Professor of Economics at the Lahore School of Economics, urges, “When ideas stop, economies stall. For Pakistan, the task is not merely to import technologies or replicate policies. It is to create an ecosystem where experimentation is rewarded, where failure is tolerated, and where ideas can move freely between universities, firms, and markets.”

With inputs from technocrats, a democratic political approach is required to resolve structural reforms.

State Bank of Pakistan (SBP) Governor Jameel Ahmed says only by moving together — the government, SBP and the private sector — can we ensure sustainable and inclusive growth. “Our firms must align their workforce development with changing market needs. The private sector should also pursue partnerships and joint ventures abroad, technology transfer, and knowledge exchange to improve productivity and competitiveness at home,” he said.

A recent Dawn editorial noted that unless the government reforms the investment regime to guarantee every investor — local or foreign, small or large — an equal opportunity to succeed based on their market performance, the current trends will persist. What the economy needs at the moment is productivity, governance and business reforms to find a way out of its current troubles through exports.

Speaking at a PBC meeting, PBC Chairperson Dr Zeelaf Munir highlighted the role of productive businesses in national progress, adding that growth requires predictability, fairness, and confidence for businesses, and that sustainable progress requires partnership between government, business, academia, and civil society.

The Population Council’s District Vulnerability Index for Pakistan (DVIP) offers a data-driven picture of vulnerabilities both at the provincial and district levels and focuses on the outcome of underlying structural and systemic factors.

In short, analysts at Dawn say that the DVIP report underpins two key points about our development landscape. First, the country’s challenges stem not only from limited resources but, more critically, from deep inequalities in how those resources and essential services are distributed across regions and communities.

Second, these entrenched vulnerabilities mean that those already left behind are both more exposed to disasters and far less likely to catch up with the better-developed areas.

Published in Dawn, The Business and Finance Weekly, December 8th, 2025

ISLAMABAD: Pre­s­ident Asif Ali Zardari and Prime Minister Shehbaz Sharif have said that Pakistan is ready to work with all willing states in South Asia to promote trade and energy linkages and it is committed to principles and objectives of the Saarc’s charter.

In their separate message on the 40th anniversary of Saarc Charter Day falling on Monday, they said that Pakistan is committed to a cooperative, inclusive and forward-looking regional order that can unlock South Asia’s vast potential and ensure a better tomorrow for all.

President Zardari said that Pakistan is ready to work with all willing states in South Asia to promote trade, transit, energy linkages and people-to-people relations that benefit the entire region.

“Pakistan remains committed to a cooperative, inclusive and forward-looking regional order. Our geography places us at the meeting point of South Asia, Central Asia and the Middle East. We are ready to work with all willing states to promote trade, transit, energy linkages and people-to-people ties that benefit the entire region,” the President said.

PM Shehbaz says Islamabad firmly committed to principles, objectives of Saarc Charter on 40th anniversary

He said: “On this Charter Day, I encourage South Asian nations to approach the future with clarity and sincerity. The region’s challenges are shared and so must be the solutions. With a spirit of respect and practical cooperation, we can shape a more peaceful and prosperous South Asia for our future generations”.

PM Shehbaz’s message

In his message, Prime Minister Shehbaz Sharif said Pakistan remained firmly committed to principles and objectives of the Saarc Charter as it believed that genuine cooperation, guided by sovereign equality, mutual respect and constructive engagement, can unlock South Asia’s vast potential and ensure a better tomorrow for all.

He said that in an era of growing regional cooperation, the necessity of economic, digital, and people-to-people connectivity in South Asia could hardly be over emphasised.

“Together, we must work to enhance linkages that facilitate trade, investment, innovation, and cultural exchange in our region,” the prime minister said.

“Our region also faces common challenges such as poverty, climate induced natural disasters, food and energy insecurity and public health issues. These challenges transcend borders and require collective responses based on mutual trust, goodwill, and a spirit of mutual cooperation. It is only by acting together that we can build a resilient and inclusive future for our peoples,” PM Shehbaz said.

Published in Dawn, December 8th, 2025

The State Bank’s latest 4MFY26 data has rung major alarm bells. The country’s current account deficit (CAD) has ballooned to $733 million, a staggering 256 per cent increase over the same period last year.

Pakistan’s imports of goods and services have jumped by 15pc and 12pc respectively, while foreign direct investment has declined by 26pc. The surge in CAD is not due to industrial investment growth; it is an economic statistic driven by stagnant exports and a deficit in investor trust.

At first glance, the jump in imports may be mistaken for some industrial investment recovery. But scratch beneath the surface, and a more worrying story emerges — one of profligate “political” import-decisions, consumption-driven excess, and a complacent trade policy, failing to lean into exports as the cure for our external woes.

A clear red flag is the composition of imports. Significant portions of the import surge seem to be driven by consumption. Petroleum and transport, including electric buses and cars, are consumption-driven and not conducive to generating income in dollars.

Capital goods can expand productive capacity and support exports. Consumer goods — particularly those of a discretionary nature — do not. They drain foreign exchange without generating future earnings.

Pakistan requires disciplined import management, not a laissez-faire approach, with a need to shift to the ‘import on merit’ model that preserves external stability

The flood of consumer goods reflects a pattern inconsistent with external prudence. Sugar imports at costly prices failed to correct domestic prices and rather only supported jacking up domestic sugar prices, a pure political decision rather than an economic justification. Projects such as subsidised electric buses raise legitimate concerns regarding cost recovery and fiscal sustainability within their operational life.

Beyond that, Pakistan’s reserves, though slightly improved, remain fragile. $14.6 billion offer limited room for manoeuvre when CAD pressures were rising and external debt repayments remained substantial. Financing a widening deficit through short-term flows is a perilous game. If global liquidity shifts or remittances dip, the country’s ability to defend the rupee and maintain reserve adequacy could be compromised.

In this context, the current trajectory is not sound. We are importing more — not only for investment but also for consumption and political signalling — while the export engine remains stuttering.

A course correction is imperative; Pakistan requires disciplined import management, not the laissez-faire approach. Import permits, like Singapore uses to monitor and regulate domestic demand patterns, can help align import decisions with national priorities. Such controls need not be protectionist; they must be strategic, transparent and merit-based. This shift from ‘import on will’ to ‘import on merit’ is essential if Pakistan is to preserve external stability.

On the other side of the equation, export policy requires urgent liberalisation, particularly for value addition. Our agricultural and agro-processing potential remains underutilised. Export bans paralyse the true potential of commodities such as pulses, jaggery, or wheat flour and often create domestic distortions while discouraging growers and processors.

The focus should instead be on value addition — for instance, exporting reprocessed, packaged pulses rather than raw produce. Such products fetch premium prices, support Pakistani brands, and contribute meaningfully to foreign exchange earnings.

Industries that convert raw materials into exportable finished goods should be incentivised through lower tax burdens and export refinancing rather than simple commodities like rice. Small and medium enterprises, in particular, can play a larger role in global value chains if provided with predictable policy support.

A more transformative reform would be to link import privileges to export performance. Allowing imports against verified exports would create a self-reinforcing discipline. Exporters would gain priority access to foreign exchange, and speculative or comfort-driven imports would be curtailed. This mechanism could help align the country’s external account with its real earning capacity.

The main obstacle is not technical capacity; it is the political economy of trade. Large import lobbies wield disproportionate influence. Overcoming this will require political will and institutional strengthening. A dedicated, data-driven cell within the State Bank and the Ministry of Commerce should evaluate import applications through a transparent digital portal. Trade policy must shift from reactive firefighting to proactive management.

The current account deficit of $733m is not a technical glitch — it is a cautionary signal that the economy is heating up, not through healthy investments but through elevated consumption and politically influenced imports.

There is a way forward by revisiting import policy, imposing smart quotas, and aligning import permits with export performance. Pakistan can transform its external imbalance from a liability into an opportunity.

Liberalising and incentivising exports, especially value-added products, can provide the engine of export-led growth we need to finance essential imports and debt servicing. By anchoring imports to export receipts, the government can reward exporters by offering tax incentives.

In short, our economic strategy must shift from ‘import at will’ to ‘import with discipline – export with ambition’. Only then can Pakistan reconcile its desire for growth with the imperative of external stability.

Pakistan cannot pursue growth by consuming the foreign exchange it has borrowed. If we don’t act decisively, the CAD of $733m may just be the start of a more dangerous drift — not just in our balance sheets, but in our long-term economic sovereignty.

The writer is a former vice president of KCCI and a commodities and international trade expert

Published in Dawn, The Business and Finance Weekly, December 8th, 2025