KARACHI: The Pakistan Business Council (PBC), a representative body of leading corporate and business groups, has urged Prime Minister Shehbaz Sharif’s administration in a letter to withdraw general subsidy on fuel and avoid populist measures that further increase inflationary pressure in the economy.
The PBC, whose member companies contribute 11 percent to Pakistan’s domestic economy and 40 percent to its exports, assured its full support to the new government that is facing several economic challenges.
It also shared its recommendations with the government to restore fiscal prudence in the country while suggesting measures to decrease pressure on foreign exchange reserves and revive the International Monetary Fund’s loan program.
“Withdraw the general subsidy on fuel,” Ehsan A. Malik, the council’s chief executive officer, said in the letter shared with the media on Tuesday. “Replace with targeted assistance through BISP [Benazir Income Support Program].”
“Avoid further populist measures that also result in increasing the inflation,” he continued while recommending to raise regulatory duty (RD) on import of non-essential goods to decrease pressure on forex reserves by cutting down on imports.
“As RD is impractical on fuel imports, limit import through conservation measures: work from home; early closure of commercial centers and wedding halls; rationing of fuel for private vehicles,” he suggested, adding: “Don’t allow the country to experience the kind of challenges confronting Sri Lanka.”
As Pakistan and the IMF resume talks over the stalled seventh review of a $6 billion loan program, the PBC strongly advocated the revival of the financial facility to “secure bilateral and multilateral funding.”
The council also recommended a competitive exchange rate by keeping it between Rs95 and Rs105 to “avoid egoistic/unsustainable measures to prop up Pak Rupee.”
Pakistan’s national currency has once again come under pressure amid higher imports and declining foreign exchange rate.
The Pak rupee lost its value by 1.03 percent on Tuesday to close at Rs184.44 against the US dollar. The currency has gained its value by more than three percent since the ouster of former prime minister Imran Khan in a no-confidence vote on April 11.
The council also called for equitable taxation regime in the country while recommending reforms in the Federal Bureau of Revenue (FBR) to spare the current tax payers further burden.
“Accelerate FBR reforms to broaden the tax base, pending which, increase the advance and withholding tax rates on non-filers,” the letter said. “Don’t burden existing tax payers further. Avoid knee-jerk revenue seeking measures that impact the long-term health of the economy.”
The council also called for stable and competitive energy supplies for industry and suggested the government to “liberate industry from legacies of past energy contracts, cross subsidies, system inefficiencies and theft” and “fast forward [work on] the additional LNG [liquefied natural gas] terminals.”
Pakistan’s industrialists suggest removal of fuel subsidy, call for avoiding populist measures
https://arab.news/mad8b
Pakistan’s industrialists suggest removal of fuel subsidy, call for avoiding populist measures
- Pakistan Business Council asks the new administration to raise duty on non-essential imports
- The PBC seeks revival $6 billion IMF program to secure further bilateral and multilateral funding
IMF warns against policy slippage amid weak recovery as it clears $1.2 billion for Pakistan
- Pakistan rebuilt reserves, cut its deficit and slowed inflation sharply over the past one year
- Fund says climate shocks, energy debt, stalled reforms threaten stability despite recent gains
ISLAMABAD: Pakistan’s economic recovery remains fragile despite a year of painful stabilization measures that helped pull the country back from the brink of default, the International Monetary Fund (IMF) warned on Thursday, after it approved a fresh $1.2 billion disbursement under its ongoing loan program.
The approval covers the second review of Pakistan’s Extended Fund Facility (EFF) and the first review of its climate-focused Resilience and Sustainability Facility (RSF), bringing total disbursements since last year to about $3.3 billion.
Pakistan entered the IMF program in September 2024 after years of weak revenues, soaring fiscal deficits, import controls, currency depletion and repeated climate shocks left the economy close to external default. A smaller stopgap arrangement earlier that year helped avert immediate default, but the current 37-month program was designed to restore macroeconomic stability through strict monetary tightening, currency adjustments, subsidy rationalization and aggressive revenue measures.
The IMF’s new review shows that Pakistan has delivered significant gains since then. Growth recovered to 3 percent last year after shrinking the year before. Inflation fell from over 23 percent to low single digits before rising again after this year’s floods. The current account posted its first surplus in 14 years, helped by stronger remittances and a sharp reduction in imports. And the government delivered a primary budget surplus of 1.3 percent of GDP, a key program requirement. Foreign exchange reserves, which had dropped dangerously low in 2023, rose from US$9.4 billion to US$14.5 billion by June.
“Pakistan’s reform implementation under the EFF arrangement has helped preserve macroeconomic stability in the face of several recent shocks,” IMF Deputy Managing Director Nigel Clarke said in a statement after the Board meeting.
But he warned that Islamabad must “maintain prudent policies” and accelerate reforms needed for private-sector-led and sustainable growth.
The Fund noted that the 2025 monsoon floods, affecting nearly seven million people, damaging housing, livestock and key crops, and displacing more than four million, have set back the recovery. The IMF now expects GDP growth in FY26 to be slightly lower and forecasts inflation to rise to 8–10 percent in the coming months as food prices adjust.
The review warns Pakistan against relaxing monetary or fiscal discipline prematurely. It urges the State Bank to keep policy “appropriately tight,” allow exchange-rate flexibility and improve communication. Islamabad must also continue raising revenues, broadening the tax base and protecting social spending, the Fund said.
Despite the progress, Pakistan’s structural weaknesses remain severe.
Power-sector circular debt stands at about $5.7 billion, and gas-sector arrears have climbed to $11.3 billion despite tariff adjustments. Reform of state-owned enterprises has slowed, including delays in privatizing loss-making electricity distributors and Pakistan International Airlines. Key governance and anti-corruption reforms have also been pushed back.
The IMF welcomed Pakistan’s expansion of its flagship Benazir Income Support Program, which raises cash transfers for low-income families and expands coverage, saying social protection is essential as climate shocks intensify. But it warned that high public debt, about 72 percent of GDP, thin external buffers and climate exposure leave the country vulnerable if reform momentum weakens.
The Fund said Pakistan’s challenge now is to convert short-term stabilization into sustained recovery after years of economic volatility, with its ability to maintain discipline, rather than the size of external financing alone, determining the durability of its gains.
