ISLAMABAD:
Planning Minister Ahsan Iqbal said on Thursday that a new roadmap has been shared with the civil-military leadership to raise Pakistan’s exports to $63 billion within four years, stressing that the country cannot end its reliance on foreign creditors without a sustained increase in exports.
The roadmap sets an ambitious target of boosting public investment to $200 billion over the next 10 years to support export-led growth, according to its broad contours.
Addressing a news conference, Iqbal said the military leadership was fully committed to the reform agenda, adding that reforms were required across 12 key governance and economic sectors.
He was speaking two days after a detailed briefing on the economy was given to Prime Minister Shehbaz Sharif and Chief of Army Staff General Asim Munir.
“The only way to break free from dependence on foreign crutches is to build foreign exchange reserves,” Iqbal said, adding that Pakistan had so far failed to fully tap its export potential.
He said the national leadership had agreed this week that a whole-of-government approach was essential to achieve the $63 billion export target over the next four years.
“It does not bode well for the country when its prime minister and army chief have to request friendly countries to roll over debt,” Iqbal said, referring to around $14 billion in short-term loans rolled over annually by China, Saudi Arabia and the UAE.
The Express Tribune reported that a high-level meeting recently took place to determine whether Pakistan can sustain its economy in the absence of the IMF umbrella after September 2027, when the bailout package would come to an end. The meeting’s key focus was on how to end the nation’s addiction to the IMF loans.
The only way to avoid the next IMF programme is to increase exports to $63 billion in four years, an addition of $20 billion over the current level, said the minister. He said that a new roadmap is shared with the national leadership for the export-driven foreign direct investment.
During the July-November period exports reduced over 6% instead of showing any growth.
The details showed that the Planning Commission said that the economic growth should be supported by a significant investment increase, reaching $200 billion a year by 2035. It said that the private sector expected to contribute most of the capital needs, putting about 75% of the total spending. The capital investment should be steered towards industry and services, despite important agriculture investments, according to the plan.
However, thinking of $200 billion total investment per annum by the year 2035 seems unrealistic, like the goal of increasing exports to $63 billion within four years, with the current poor governance and economic structure.
From the central bank to the Special Investment Facilitation Council, every government functionary is now talking about the spectacular failures of the current growth model, which has buried the country under a deep debt burden and its economic policy is in the hands of foreign nations and international financial institutions.
But the Planning Commission was hopeful that the country can increase the foreign direct investment from the current low level of just $2 billion.
SIFC national coordinator Lt General Sarfraz said a few days ago that the foreign investors were more inclined to invest in the consumption sectors but the country needs investment in the export-oriented areas.
The discussions at the highest civil and military levels are taking place in an effort to come out of the low economic growth, low investment, low exports and high unemployment and poverty trap. All the indicators suggest that Pakistan will need another IMF programme after the expiry of the current bailout package, if immediate governance and economic reforms measures are not taken.
Separately, there have also been discussions about the performance of the current economic team.
The Planning Commission’s assessment is that when the country transitions from stabilisation to a growth mode, its current account deficit may temporarily increase to below 2% of GDP, or over $10 billion per annum. This would require additional financing of $4 billion in 2027-28, $5.5 billion in 2028-29, and another $3 billion in 2029-30.
But the Planning Commission informed the civil-military leadership that the country can sustain itself without the IMF and also manage a projected external financing requirement of over $12 billion from 2028-30, subject to urgent implementation of deep-rooted reforms.
The Planning Commission has proposed a three-tier implementation plan, with the first phase starting next year until 2027. It would require reforms in fiscal management, energy, governance, human resource development and export alignment, and laying foundations for the next phase.
The second phase, 2029-32, would require accelerated strategic focus on investment attraction as a growth catalyst, to kick start key economic processes with full thrust and focus on industrialization, export expansion, technological adoption and agricultural modernization.
Iqbal said that in the presence of the IMF programme it was difficult to take certain measures therefore, it has been proposed to focus on the reforms during this period.
He also said that the federal government alone cannot do anything and it needs active support of the provinces to implement the reform agenda. Iqbal also said that it was a blessing that the military leadership was fully backing the reforms agenda.
