By: S.M.A. Kazmi
Once again, Pakistan’s federal budget finds itself caught between the familiar pressures of IMF compliance and the aspirations of economic growth. As the government projects a GDP growth target of 4.2% for the coming year—up from a modest three-year average of 1.65%—there’s a growing sense that this budget is less about transformation and more about treading water.
At the heart of this financial juggling act is the IMF programme’s demand for fiscal consolidation. The result? A budget that tries to appease lenders while attempting, without much imagination, to inject life into a stagnant economy. But instead of laying the groundwork for sustainable, broad-based development, it appears to rely on familiar shortcuts—and a few questionable backdoors.
Take, for instance, the generous tax incentives extended to the real estate and construction sectors. Many believe these measures are designed not out of sound economic planning, but out of political expediency—a quick fix to push up the growth rate without addressing deeper structural issues. This approach might offer a temporary bump, but we’ve been down this road before. Real estate speculation may inflate GDP figures, but it does little for long-term productivity or equity.
This year’s provisional GDP growth came in at 2.7%, missing the initial 3.2% target but landing within the IMF’s expectations. Yet, even this modest uptick has raised alarm bells. As imports surge faster than exports, economists warn that pushing growth without addressing external vulnerabilities could strain the country’s current account all over again.
Ehsan Malik, CEO of the Pakistan Business Council, summed it up bluntly: “The budget offers little to boost industrial productivity or exports.” In other words, the engines of sustainable growth remain idle while policymakers continue to chase short-term targets.
This sentiment is echoed by economist Sajid Amin, who describes the budget as primarily focused on fiscal stabilisation and revenue collection—essentially, a strategy to keep the IMF happy rather than bring real change. It’s not a growth budget, he argues, but a “routine” one, largely designed to survive the IMF’s upcoming review.
Economist Ali Hasnain agrees, pointing out that the so-called “improvements” in the external sector have less to do with increased exports or foreign investment and more to do with a spike in remittances. That’s not a sustainable model. As he puts it, “It’s a cautious step forward, but with no clear roadmap.”
There are some commendable moves in this year’s budget—such as the gradual removal of tax exemptions for businesses in FATA/PATA and restrictions on non-filers purchasing vehicles or opening bank accounts. These steps may help level the playing field and improve tax compliance. But they are long overdue and still fall short of what’s needed.
The Overseas Investors Chamber of Commerce and Industry (OICCI), which represents over 200 multinational firms in Pakistan, cautiously welcomed the budget’s reform gestures but expressed frustration over the lack of progress on corporate tax parity and the documentation of the informal economy. Pakistan’s Rs9 trillion cash-based economy remains largely outside the tax net, yet the budget offered no bold strategy to change that.
Moreover, the government continues to dodge the hard work of cutting its own expenses. In a country drowning in debt and deficits, the lack of meaningful expenditure reduction is a glaring omission. As the OICCI rightly pointed out, fiscal discipline is non-negotiable if macroeconomic stability is to be achieved.
So what are we left with?
A budget that sticks to the script, hoping to tick IMF boxes and avoid economic collapse. But hope is not a strategy. What Pakistan needs is not another cycle of patchwork policies and politically safe bets, but transformative, bold reforms—the kind that broaden the tax base, lift productivity, and move the economy out of survival mode and into sustainable growth.
Until that happens, Pakistan will remain stuck in a loop—balancing precariously on borrowed time and borrowed money, always a step away from the next crisis.
