ISLAMABAD:
Planning Minister Ahsan Iqbal said on Thursday that a new roadmap has been shared with civil and military leaders to increase Pakistan’s exports to $63 billion within four years, stressing that the country cannot end its dependence on foreign creditors without a sustained increase in exports.
The roadmap sets an ambitious target of increasing public investment to $200 billion over the next 10 years to support export-led growth, according to its broad outline.
Addressing a press conference, Iqbal said the military leadership was fully committed to the reform agenda, adding that reforms were needed in 12 key sectors of governance and economy.
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 up foreign exchange reserves,” Iqbal said, adding that Pakistan has so far failed to fully exploit its export potential.
He said national leaders agreed this week that a whole-of-government approach was essential to meeting 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 ask friendly countries to roll over their debt,” Iqbal said, referring to about $14 billion in short-term loans rolled over annually by China, Saudi Arabia and the United Arab Emirates.
The Express PK Press Club reported that a high-level meeting was held recently to determine whether Pakistan can sustain its economy in the absence of IMF support after September 2027, when the bailout package ends. The main objective of the meeting was how to end the country’s dependence on IMF loans.
The only way to avoid the next IMF program is to increase exports to $63 billion in four years, an increase of $20 billion from the current level, the minister said. He said a new roadmap had been shared with national leaders for export-oriented foreign direct investments.
During the July-November period, exports declined by more than 6% instead of showing any growth.
Details show the Planning Commission said economic growth should be supported by a significant increase in investment, reaching $200 billion a year by 2035. It said the private sector hoped to contribute the bulk of capital requirements, providing about 75% of total spending. According to the plan, capital investments should be oriented towards industry and services, despite significant agricultural investments.
However, considering a total investment of $200 billion per year by 2035 seems unrealistic, as does the goal of increasing exports to $63 billion within four years, given the current poor governance and economic structure.
From the central bank to the Special Investment Facilitation Council, every government official is now talking about the spectacular failures of the current growth model, which has left the country buried under a heavy debt burden and its economic policy in the hands of foreign nations and international financial institutions.
But the Planning Commission hopes the country can increase foreign direct investment from the current low level of just $2 billion.
SIFC National Coordinator Lt Gen Sarfraz said a few days ago that foreign investors were more inclined to invest in consumer sectors, but the country needed investments in export-oriented areas.
Discussions at the highest civilian and military levels are taking place with the aim of breaking out of the trap of low economic growth, low investment, weak exports and high unemployment and the poverty trap. All indicators suggest that Pakistan will need another IMF program after the current bailout expires, if immediate steps on governance and economic reforms are not taken.
Furthermore, discussions also took place on the performance of the current economic team.
The Planning Commission’s assessment is that as the country moves from a stabilization mode to a growth mode, its current account deficit could temporarily increase to less than 2 percent of GDP, or more than $10 billion per year. This would require additional funding of $4 billion in 2027-28, $5.5 billion in 2028-29 and an additional $3 billion in 2029-30.
But the Planning Commission informed civilian and military leaders that the country can sustain itself without the IMF and also manage a projected external financing requirement of more than $12 billion between 2028 and 2030, subject to urgent implementation of far-reaching reforms.
The Planning Commission has proposed a three-tier implementation plan, the first phase of which will begin next year until 2027. This would require reforms in fiscal management, energy, governance, human resource development and export alignment, as well as laying the foundation for the next phase.
The second phase, 2029-32, would require an accelerated strategic focus on investment attraction as a catalyst for growth, to launch key economic processes with full impetus and focus on industrialization, export expansion, technology adoption and agricultural modernization.
Iqbal said that in the presence of the IMF program it was difficult to take certain measures, which is why it was proposed to focus on reforms during this period.
He also said that the federal government cannot do anything alone and needs the active support of the provinces to implement the reform agenda. Iqbal also said it was a blessing that the military leadership fully supported the reform agenda.
