Karachi: Faraz-ur-Rehman, Founder of Pakistan Business Group and Former President of Korangi Association of Trade and Industry (KATI), has highlighted Pakistan’s ongoing economic reforms, emphasizing their role in stabilizing financial markets, attracting foreign investment, and ensuring long-term economic growth. Despite challenges such as inflation, currency depreciation, and high interest rates, recent measures have sparked renewed confidence in economic recovery.
Interest Rate Reduction to Boost Growth
The State Bank of Pakistan has slashed its key policy rate from 22% to 12%, marking a significant reduction of 1,000 basis points since mid-2024. This move is expected to lower borrowing costs for businesses, stimulate industrial activity, and bring inflation down to 5.5%-7.5% by mid-2025.
Strengthening Foreign Reserves & IMF Support
Pakistan has secured a $7 billion IMF program, committing to structural reforms such as increasing agricultural taxes to enhance revenue collection. Additionally, the World Bank has approved a $20 billion, 10-year funding package, focusing on economic resilience, climate adaptation, and human capital development.
Foreign Direct Investment and Trade Surplus
Investor confidence is on the rise, with Foreign Direct Investment (FDI) increasing by 20% in early 2025. Programs like Roshan Digital Account have attracted over $9 billion in inflows, while remittances have reached a record $35 billion. Pakistan’s current account has remained in surplus for three consecutive months, reflecting economic stabilization.
Challenges and Future Policy Outlook
Fiscal Reforms for Sustainable Growth
The government is broadening the tax base and eliminating unnecessary exemptions to strengthen fiscal policies and ensure sustainable growth.
Industrial and Energy Sector Reforms
To boost industrial competitiveness, the government is focusing on reducing energy costs, stabilizing fuel prices, and ensuring an uninterrupted power supply for industries.
Military’s Role in Economic Decision-Making
The Special Investment Facilitation Council (SIFC), co-led by the army chief, is streamlining investment processes. However, maintaining a balance between civilian and military economic interests remains crucial to sustaining investor confidence.
GDP Growth and Future Projections
The IMF has revised Pakistan’s GDP growth forecast to 3% for 2025, with expectations of reaching 4% by 2026. Economic policies will continue to focus on improving business conditions, reducing trade deficits, and ensuring macroeconomic stability.
According to Faraz-ur-Rehman, Pakistan’s economic policies are paving the way for recovery and long-term stability. With continued commitment to monetary easing, fiscal discipline, and structural reforms, Pakistan is on the path to sustainable economic growth and financial resilience in the years ahead.
BY : Faraz-ur-Rehman,
Founder of Pakistan Business Group and Former President of Korangi Association of Trade and Industry.
