Pakistan is at a pivotal moment in its economic journey. According to the Chairman of the Federal Board of Revenue (FBR), Rashid Mehmood Langrial, the country is fit for growth but must navigate carefully to avoid economic imbalances. Sustainable Growth He shared these views during Geo News’s special transmission, “Aakhri Mauqa: Pakistan Kay Liye Kar Dalo,” hosted by Shahzeb Khanzada.
Economic Cha****llenges & The Way Forward
Pakistan has experienced volatile economic cycles, especially in 2017 and 2022, when rapid growth led to an unsustainable current account deficit. Experts believe that the country must adopt a cautious and gradual approach to economic development to avoid repeating past mistakes.
Key Takeaways from the Discussion:
- Taxation Concerns: The FBR chairman acknowledged that corporate, salaried, and manufacturing sectors face high tax rates. There is a tax gap of Rs1.7 trillion in income tax from the top 5% earners, with the top 1% (600,000 individuals) contributing to a Rs1.2 trillion tax gap.
- Sustaining Economic Stability: The IMF-backed program has helped stabilize the economy, increase foreign reserves, and reduce inflation. However, achieving sustainable growth requires a well-balanced strategy.
- Foreign Exchange Reserves: Pakistan needs to increase its forex reserves from negative USD 10 billion to at least USD 22 billion to support long-term growth.
- Faceless Tax System: The FBR plans to implement a faceless tax system across Pakistan, ensuring transparency and efficiency in revenue collection.
Industry Leaders Weigh In
Prominent business leaders, including Arif Habib (Arif Habib Group), Muhammad Ali Tabba (Lucky Cement), Muhammad Sohail (Topline Securities), and Ahsan Malik (Pakistan Business Council), shared their insights on sustainable economic growth.
Arif Habib emphasized the importance of learning from past mistakes and avoiding over-reliance on imports. He pointed out that construction is taxed more than industry, calling for tax rationalization.
Muhammad Ali Tabba highlighted the need for balanced and inclusive growth, warning against excessive reliance on imports. He suggested developing indigenous industries like shipping, aviation, IT, and data centres to boost employment and exports.
Muhammad Sohail stressed that Pakistan is not yet ready for high growth due to negative forex reserves. He advocated for stabilization before aggressive growth measures.
Ahsan Malik shared that the Pakistan Business Council (PBC) has proposed a three-year budget plan to the government for long-term economic stability. He called for better coordination among policymakers to ensure a consistent economic direction.
The Road to Sustainable Growth
Pakistan’s path to sustainable economic growth lies in strategic planning, tax reforms, and industry diversification. The government must focus on developing new industries, rationalizing taxes, and increasing forex reserves before aiming for higher growth rates.
The next 12 months (Feb 2025 – Feb 2026) will be crucial in determining whether Pakistan can sustain economic stability while pursuing growth. As the FBR chief mentioned, growth is inevitable, but it must be gradual and well-calibrated to ensure long-term prosperity.
