Muhammad Kaleem The Institute of International Finance (IIF), which represents over 400 financial institutions worldwide, recently shared a report on Pakistan’s economy. The report praised Pakistan’s stronger-than-expected recovery but warned that the country has missed the chance to make it long-lasting due to the lack of bold reforms. Notably, Pakistan has no representation in IIF, while India is represented by two financial institutions.
The report highlighted that Pakistan’s recovery mainly came from the IMF program and support from friendly countries, including rollover loans worth USD 16 billion. However, key problems in the power and tax sectors remain unresolved. These long-standing issues continue to slow down growth and show that structural reforms are still missing.
In the energy sector, the government points to reduced electricity tariffs as an achievement. This was linked to renegotiating some power contracts, lower global fuel prices, and borrowing from banks to address circular debt. However, challenges remain, especially with subsidies and pending agreements with Chinese power producers, which limit the effectiveness of these measures.
The tax system also needs serious reform. Instead of focusing on direct taxes based on income levels, Pakistan relies heavily on indirect taxes, which burden the poor more than the rich. Experts believe that fair taxation, reduced government spending, and bold reforms are necessary for long-term stability. Without these steps, the current economic recovery may not last.
