International credit rating agency Moody’s has upgraded Pakistan’s debt rating from Caa3 to Caa2, indicating positive signs for the country’s economy. The report suggests that Pakistan’s capacity for foreign payments is improving. Prime Minister Mohammad Shehbaz Sharif expressed satisfaction with Moody’s upgrade, noting that the economic team’s efforts are yielding results, and the economy is now on the path from stabilization to growth.
It is encouraging that the current government’s economic policies are beginning to show positive effects. Improving Pakistan’s economic situation is indeed a complex issue requiring a multifaceted strategy. The country faces challenges such as rapid population growth, inflation, and unemployment. Focus needs to be placed on increasing exports and attracting foreign direct investment to balance imports and exports.
Pakistan must attract foreign investors by offering tax exemptions, reduced tariffs, and improved regulations and incentives. Making business operations easier will make Pakistan more attractive to investors. Improving the country’s basic economic infrastructure and transportation network, electricity generation, and telecommunications is essential. This will boost economic activity and productivity.
Pakistan should focus on developing its export industries, particularly textiles, agriculture, and pharmaceuticals. This requires investment in technology, research and development, and marketing. Pakistan is strategically positioned to become a trade hub in the region. The government should work on enhancing regional integration by building closer relations with neighboring countries and promoting cross-border trade. The current account deficit remains a significant challenge.
The government should focus on promoting domestic production and developing local industries to reduce imports. This can help lower dependence on imports and improve the balance of payments. Overall, continuous efforts from both the government and private sector are needed to address fundamental structural issues that are hindering economic development.
While signs of economic improvement are welcome, the poor and middle class are struggling under the burden of inflation and indirect taxes. The financial burden on the common man has increased due to the collection of all taxes through utility bills. Expensive energy is a major obstacle to industrial growth, thus there is a pressing need to reassess economic policies.
The business community is protesting against the government’s business-unfriendly policies. While the business community has the right to protest, it is also crucial for wealthy segments of society to contribute their fair share of taxes to support the national economy. It is important to address why traders are reluctant to enter the tax net and find answers to this question. Traders who earn millions while exploiting small shopkeepers are trying to avoid taxation.
The retail industry in Pakistan has been on a growth trajectory in recent years, reaching one milestone after another. The Federal Board of Revenue (FBR) should focus on bringing new sectors into the tax net rather than imposing additional taxes on existing businesses. Managing the rising cost of doing business in the country is crucial. Subsidies also pose a major problem and should be targeted. We need to halt the practice of subsidies as they often end up in the pockets of middlemen. Additional taxes will further damage the economy and destroy businesses.
The government should ensure that all transactions are conducted through banking channels. Through banking transactions, the government can easily assess direct taxes, whereas indirect taxes have a greater impact on the poor. If taxpayers are treated well and their pathways are facilitated, they can contribute significantly to achieving major goals. However, difficult processes can discourage people from participating in the tax system.
Countries like Iran, Russia, and Central Asian states are at our doorstep. If we want to stand on our own economic feet, we should review imports from these countries in detail, especially those from distant countries. We should produce locally what we can, ensuring that it meets international standards, so there is no reason why good-quality, affordable goods cannot be sourced locally instead of importing them. Currently, there are over 400 textile industries in Pakistan. The textile sector needs to be competitive and further improved as it plays a significant role in Pakistan’s total exports. The government should help find markets for Pakistani textile exports internationally.
Additionally, Pakistan needs to take better measures for cotton cultivation, upgrade the agricultural economy, and provide support to farmers. All major textile brands are produced in Pakistan, but no industrial policy can succeed without continuous electricity and gas supply at competitive rates, modern industrial infrastructure, telecommunications networks, skilled workers, advanced banking, and a friendly tax system. It would also be beneficial to consider reactivating institutions like the Pakistan Industrial Development Corporation, established in the past, for industrial and economic development.
A country’s overall impression should be positive as it forms the foundation of industrial growth. Only then will people be encouraged to invest in industry. Many industrial firms in Pakistan have the potential to produce locally what we currently import, which could significantly boost the economy.
The salaried class plays a crucial role in supporting the economy and market growth. However, with the burden of direct and indirect taxes, meeting basic needs has become increasingly difficult for them. Instead of imposing super taxes or extra taxes on industrialists, they should be encouraged to spend on social responsibility projects through the CSR model. Tax reforms are also urgently needed.
Many industrial firms in Pakistan have the capability to produce locally what we currently import, thereby saving valuable foreign exchange. Through public-private partnerships and transparent privatization processes, we can move in the right direction towards achieving industrial development goals. Currently, Pakistan has the lowest tax collection among SAARC countries. We need to accelerate the process of restoring industrial institutions through public-private partnerships or privatization.
To make the tax culture in Pakistan acceptable and understandable, it is essential to respect taxpayers and prioritize them, as seen in developed countries. They should be provided with facilities at government and public places. If a taxpayer is not given exceptional respect and is instead humiliated, it will discourage others from joining the tax net. We need to build national consensus on the economic development agenda.
Government institutions should play a positive role in creating a business-friendly environment and should receive necessary training to promote rather than obstruct business activities. Our bureaucracy is currently more authoritative than consultative, making it essential to modernize traditional administrative practices to fit the 21st century.