ISLAMABAD: Coordinator to Prime Minister on Implementation and Monitoring Rana Ihsaan Afzal on Tuesday said the current government was undertaking serious fiscal regime reforms to ensure completion of the International Monetary Fund’s (IMF) 21st programme as the last lending facility opted by the country.
He was speaking at a session titled ‘Debt, Debt Justice and Development’ on the second day of the Sustainable Development Conference organized by Sustainable Development Policy Institute (SDPI) in collaboration with the climate change ministry.
Mr Afzal termed the country’s consumption-based economy as a precursor to its increasing external borrowing.
However, due to the already tightening revenue guards in place, the government had closed the window of another spike in taxes for the next budget, he added.
Member of National Assembly (MNA) and Muttahida Qaumi Movement-Pakistan (MQM-Pakistan) leader Dr Farooq Sattar pointed out that a state of denial among the government, political parties, and the opposition was not allowing policymakers to initiate curative measures for economic revival as the country’s economy was living on symptomatic solutions.
Deputy Executive Director, SDPI, Dr Sajid Amin Javed, said debt discussions were limited to staggering numbers and statistics, adding that the governments did not pay taxes but rather the masses were bearing the brunt of increased taxes and revenue collection decisions.
Mohsin Mushtaq Chandna, DG (Debt), Finance Division, said the year 2022 was bad for developing economies like Pakistan as inflation was rising and climate disasters had further aggravated their economic stress.
Abdullah Dayo from FES said the theme of the discussion was crucially important as the growing debts of the country were burdening and stressing the financial space.
Dr Hamza Ali Malik, Director MPFD, UNESCAP, said the economic and fiscal mismanagement were the main reasons for Pakistan's poor debt management whereas liquidity versus solvency issue in the country needed further probe to devise clear strategy post debt consumption.
Executive Director, PRIME Institute, Ali Salman said in debt, restructuring and debt justice statistics alone could be misleading as under such a matrix, it had to be economically and politically sustainable.
Ammara Durrani from the UNDP said the current global financial architecture had been repeatedly discussed by UN and declared dysfunctional for countries like Pakistan.
Executive Director, Tabadlab, Mosharraf Zaidi said Pakistan was insolvent financially but globally commercial banks were providing large amounts of debts to it.
Imtiaz Ali Solangi from the FBR said the country needed to initiate planning for debt restructuring as it involved negotiations with stakeholders, stocktake scenarios, and multiple negotiations with lenders.
Chinese business leaders push for security, policy stability
In another session on ‘Driving Special Economic Zones (SEZs) Development Under CPEC 2.0: Opportunities for Sustainable Industrial Growth’, representatives of Chinese businesses called on the Pakistani government to prioritise one-window operations, ensure continuation of supportive policies, and enhance security for investors to foster industrialisation and business growth in the country.
Wang Huihui, chairman of the China Chamber of Commerce and Industry in Pakistan (CCCI), suggested that Pakistan must provide a secure environment for the Chinese private sector to invest in the country.
He also emphasised that Pakistan could benefit from learning about China's Green Special Economic Zones (SEZs) model for sustainable economic growth.
The CCCI chairman said Pakistan must create a secure investment environment to encourage Chinese private-sector participation. He specifically pointed to the importance of learning from China’s Green SEZ model, which emphasised eco-friendly development and sustainable practices, including the use of renewable energy.
Mushahid Hussain, a prominent Pakistani politician, analyst, and chairman of Pakistan-China Institute, underscored China's pivotal role in global economic growth, noting that 30 per cent of worldwide growth came from China.
He praised China’s dual focus on connectivity and green development, highlighting the country’s leadership in technological fields such as AI, robotics, and 5G.
He also pointed to China’s regional expansion, including its $400 billion partnership with Iran and the construction of the Wah Khan Corridor, which will link not only Pakistan but other Central Asian states.
Executive Director of the Pakistan China Institute (PCI) Mustafa Hider Syed also echoed calls for an autonomous body to oversee SEZ development in Pakistan.
He argued that bureaucratic instability, with frequent changes in ministers and officials, hinders progress in the SEZ sector.
Senior Adviser to Energy China Hassan Daud Butt stressed the importance of localisation for the success of SEZs. He pointed to the growing interest from Chinese companies in industries such as packaging and energy but warned that the government must implement a clear roadmap to address existing challenges.
Additional Secretary and Executive Director at Pakistan's Board of Investment (BoI) Erfa Iqbal said China was shifting from labour-intensive industries and that the focus of SEZs under CPEC should now be on private sector engagement.
She emphasised that while Pakistan faces challenges, the SEZs were not in a dire situation, and there was room for growth in Phase II of CPEC.
Addressing concerns from the International Monetary Fund (IMF) over incentives for SEZs, she clarified that the IMF had recommended phasing out, not eliminating, these incentives.
Shakeel Ahmad Ramay, CEO of the Asian Institute of Eco-civilization, Research, and Development (AIERD), called for a more efficient and streamlined approach to managing CPEC investments.
He criticised the overlapping roles of institutions such as the Special Investment Facilitation Center (SIFC) and BoI, arguing that multiple agencies handling the same responsibilities lead to inefficiency and confusion.
