CMA Journal (Mar-Apr 2024)

2
3
President's Message
From the Desk of Chief Editor

Inside this Issue
Volume : 33.2 l Mar-Apr 2024
Exclusive Interviews
5 8 11
Ms. Esther Perez Ruiz Mr. Atif Ikram Sheikh Dr. Hafiz A. Pasha
IMF Resident Representative President, The Federation of Pakistan Former Federal Minister for Finance and
in Pakistan Chambers of Commerce & Industry (FPCCI) Professor Emeritus Beaconhouse
National University (BNU) Lahore
13 Corporate Leaders of ICMA Articles Section

61
Organiza onal Excellence
Focus Section through Diversity
By Sohailuddin Alavi
14 37
IMF, Poli cal Will, And Declining Managing Economic Challenges:
Investments in Pakistan -
When will the Saga end?
Breaking the Cycle of Dependence
By Mohammed Naveed Jamal, ACMA
Top Technology Trend
64 By Intzar Hussain Rana, FCMA
By Muhammad Azfar Ahsan Industry 4.0 Transforma on
40
Exploring Alterna ves to IMF Support:
17
IMF Partnership and Pakistan's
Diversifying Economic Strategies
Economic Future
By: Saeed Akhtar, FCMA
By Muhammad Azam, ACMA
Sector Brief
20 43
Pakistan under IMF Program: IMF — Not a Panacea but a Medicina
68 of Health Sector in Pakistan

In Search of a Sustainable Solu on By Syed Shamim Ahmed, FCMA Sector Brief & SWOT Analysis
By Dr. Faisal Sultan Qadri
22 46
Pakistan and IMF Trignometery By Research & Publica ons Department, ICMA
Fostering growth under
IMF programme By Khizar Hayat, FCA
By Huzaima Bukhari, Dr. Ikramul Haq
Other Features
49
and Abdul Rauf Shakoori Naviga ng the Winds of Change:
70
A Strategic Guide Amidst SIFC's Strategic Policy Ini a ves to
24
Char ng the Course to Self-Sufficiency:
IMF-Supported Reforms Enhance Investment in Pakistan
Strategies Beyond IMF Dependency By Research & Publica ons Department, ICMA
By Rukhshinda Mehar and
By Muhammad Ahmed, ACMA
Dr. Saqlain Sher
28
IMF and Taxa on Reforms
By Muhammad Ammad Ansari, ACMA
53
IMF Influence: A Diagnosis of Pakistan's
Economic Dependency and the Role
73 Economy News
31
Naviga ng Pakistan's Economic of Chartered Management Accountants
Challenges: From IMF Dependency
to Strategic Solu ons
By Abrar Hussain, ACMA
74 Regulatory News
55
By Jalal Ahmad Khan, FCMA The Impact of IMF Lending on
Developing Na ons: Case Studies from
34 76
IMF and Energy Sector Reforms: Glossary of Management
Ghana, Serbia, Ireland, and Jamaica
Case Study of Pakistan By Research & Publica ons Department, ICMA Accoun ng Terms
By Hasnain Imam, ACMA
May-Jun Modernizing Agriculture DISCLAIMER: The Chartered Management

Accountant is published bi-monthly. Views or
2024
Our Next for Better Food Security opinions expressed by the authors of the articles
published in this Journal do not necessarily reflect
Issue Deadline for submission of articles is May 25, 2024 the views of the publisher and/or the Editor.
/icmapak /icmapdotpk /company/icmap

President's
Message
Dear Esteemed Members and Colleagues,
President's
In the latest issue of the CMA Journal, we focus on the theme of 'Pakistan, IMF, and
Message
the Way Forward.' This is a critical time for our nation, as we navigate a
challenging economic landscape and seek avenues for sustainable growth and
development. The recent visit of Finance Minister Mr. Muhammad Aurangzeb to
the IMF has instilled hope for a larger and longer program to support Pakistan's
economic revival. This potential program would provide crucial assistance for
stabilizing our economy and fostering growth.
While the IMF bailout package is essential for economic recovery, the new
government must act promptly to restructure our taxation and energy sectors.
These reforms are vital to generate revenue, reduce subsidies, and create a more
stable economic environment. It is imperative to bring individuals and businesses
under the tax net who are either not paying taxes or paying less than their
potential. Expanding the tax net to include the real sector, small businesses, and
the retail sector will enhance our economic foundation and ensure a fairer
distribution of the tax burden.
Additionally, the recent visits of the foreign minister of Saudi Arabia and the
Iranian president to Pakistan are promising developments for our international
relations. The memorandums of understanding signed with Saudi Arabia offer
deepened financial relations and present investment opportunities in various
sectors such as hospitality, aviation, and mining. The agreement with Iran to
increase bilateral trade volume further solidifies our economic partnerships and
opens avenues for mutual growth.
At this juncture, it is imperative that our political forces unite and work together
for the betterment of our country in the best national interest. We must seize this
opportunity to demonstrate that Pakistan is a responsible and reliable partner on
the global stage, capable of making sound economic and political decisions that
will benefit its citizens and allies alike. ICMA stands ready to provide the
government with technical and professional support in policy formulation and
the implementation of cost-effective project solutions. Our collective efforts will
pave the way for a more resilient and prosperous Pakistan.
Let us move forward with unity and determination for a stronger future.
Shehzad Ahmed Malik, FCMA

President ICMA
2 ICMA’s Chartered Management Accountant, Mar-Apr 2024

From the Desk of
Chief Editor
Dear esteemed readers,
I am delighted to present the March-April 2024 edition of the Chartered
Chief Editor
Management Accountant Journal, dedicated to the theme of 'Pakistan, IMF
& the Way Forward.'
First, I want to express my sincere gratitude to Ms. Esther Perez Ruiz, the IMF
Resident Representative in Pakistan, for her insightful interview shedding
light on the IMF's engagement with Pakistan to achieve economic stability.
My thanks also extend to Mr. Atif Ikram Sheikh, President of the Federation
of Pakistan Chambers of Commerce & Industry (FPCCI), and Dr. Hafiz A.
Pasha, a distinguished economist and former Minister of Finance in Pakistan,
for their exclusive contributions to this issue.
In our Focus Section, we appreciate Mr. Azfar Ahsan, former Minister for
Investment, for his in-depth article on 'IMF, Political Will, and Declining
Investments in Pakistan: When Will the Saga End?' Out of the 15 focus
articles, nine have been authored by ICMA members, showcasing their
expertise and insight.
From the Desk of
Additionally, our Research & Publications Department has crafted a

comprehensive study titled 'The Impact of IMF Lending on Developing
Nations: Case Studies from Ghana, Serbia, Ireland, and Jamaica,' offering
valuable perspectives on the subject. This issue also features an in-depth
Sector Brief and SWOT analysis on Pakistan's Health Sector.
This issue underscores our commitment to fostering meaningful discussions

on key economic challenges and opportunities facing Pakistan today. By
engaging with a range of experts and professionals in these areas, we aim to
provide you with a deep appreciation of the complex dynamics at play in
our national and global economy.
Your participation and insights are crucial to the continued success of our
journal and the accounting profession. We look forward to hearing your
thoughts and encourage you to share them at [email protected].
Ather Saleem, FCMA

Vice President ICMA &
Chairman, Research and Publica ons Commi ee
ICMA’s Chartered Management Accountant, Mar-Apr 2024 3

Research & Publications Committee
Chairman MEMBERS
Dr. Salman Masood Muhammad Muhammad

Ather Saleem, FCMA FCMA Sajjad, FCMA Azhar Khan, FCMA
Chief Editor
Ather Saleem, FCMA
Vice President ICMA and
Chairman, Research and Publica ons Commi ee, ICMA
Editorial Board
Dr. Salman Masood Sheikh, FCMA
Professor / Dean
Superior University, Lahore
Syed Babar Ali, FCMA Farough Ali Syed Babar Ali Tanvir Sajid
Associate Professor & Chairman, A & F
Naweed, FCMA FCMA FCMA
Department - Salim Habib University - Karachi
Tanvir Sajid, FCMA
Chief Financial Officer -
AQ Tex les (Pvt) Limited - Faisalabad
Sheikh Muhammad Shabbir, FCMA
Director Finance - Dawood University of
Engineering and Technology - Karachi
Dr. Khalid Mumtaz, FCMA
Director Leadership Development Centre
Bahria University - Islamabad
Dr. Salman Sarwat, FCMA Najaf Abbas, Babar Saleem Tasaduq Ejaz
Associate Professor Benazir Bhu o Shaheed FCMA ACMA ACMA
University (BBSU)- Karachi
Abdul Rahman, FCMA
Head of Accoun ng & Treasury -
Bayer Pakistan (Pvt) Ltd., Karachi
Ghulam Farid, ACMA
Assistant Professor- Government Graduates
College of Science - Lahore
Prof. Dr. Muhammad Azeem Ahmad
Head, Na onal Business School -
The University of Faisalabad Muhammad Ahmed Mohammad Abdur
Dr. Arshia Hashmi ACMA Rub Khan, ACMA
Associate Professor - Faculty of Management
Sciences, University of Central Punjab, Lahore
Correspondence Address
Aamir Ijaz Khan, FCMA
Execu ve Director, ICMA Ins tute of Cost and Management Accountants of Pakistan
Editor ST-18/C, ICMAP Avenue, Block-6, Gulshan-e-Iqbal, Karachi-75300, Pakistan.
Shahid Anwar Ph: + 92 21 99243900 Ext. 117 / 107 | Fax: + 92 21 99243342
Director, Research and Publica ons, ICMA Email: [email protected] | URL: www.icmainterna onal.com

Exclusive Interview
Exclusive Interview
Ms. Esther Perez Ruiz

IMF Resident Representative in Pakistan
“ Pakistan needs to significantly mobilize

revenues to create resources for much
needed social and development spending,
strengthen sustainability, and reduce
overreliance on external financing. Overall,
it is essential for Pakistan to increase the
progressivity, simplicity, and fairness of the
tax system so that those who can afford it
“
contribute their fair share
ICMA: Please briefly share the contribution of the mobilized properly, they can contribute to higher living
IMF in supporting Pakistan on economic policies standards (per capita income).
and reforms?
The recent period of Pakistan’s 2023 Stand-by
Esther Perez Ruiz: Let me start by thanking ICMA Arrangement (SBA) shows some of the benefits of sound
International for the opportunity to offer, on behalf of the policy making supported by a Fund-supported program.
IMF, our perspective on Pakistan’s present economic After a period of economic turbulence in FY2023
situation and potential opportunities. stemming from a difficult external environment and
policy slippages, the caretaker government and State
The IMF is here to help support Pakistan’s efforts to Bank of Pakistan have brought about a renewed sense of
realize its potential through sound economic policies and economic stability. Over the past few months, Pakistan’s
reforms. These are needed to reduce Pakistan’s structural economic and financial position has improved with
vulnerabilities that make it susceptible to high economic growth and confidence gradually recovering on the back
volatility and low growth. Our partnership with the of prudent fiscal management with due protection of the
government seeks to create an environment to social safety net, a monetary stance geared toward
strengthen private sector activity and create investment lowering inflation and pursuing exchange rate flexibility
and job opportunities, as well as to mobilize resources for and transparent FX market operations, and the timely
critical social and development spending to make adjustment of power and gas tariffs to shore up energy
concrete progress toward the Sustainability and sector viability while protecting the vulnerable through
Development Goals. For example, Pakistan’s young labor progressive tariff structures. Continuing these policies
force is an unrealized strength given high with deeper structural reforms will help Pakistan move
unemployment, informality and economic volatility. If from stabilization to stronger more inclusive growth.

Exclusive Interview
policy to lower inflation while also ensuring a flexible

exchange rate to buffer shocks and rebuild reserves.
Looking ahead, the authorities Looking ahead, the authorities have also expressed
interest in a successor medium-term Fund-supported
have also expressed interest in a program, permanently resolving Pakistan’s fiscal and
external sustainability weaknesses and laying the
successor medium-term foundation for strong, sustainable, and inclusive growth.
Fund-supported program, The IMF could support a program which cements
credibility through sound policy making and robustly
permanently resolving Pakistan’s tackles long-standing structural challenges.
ICMA: Do you think FBR restructuring is vital for
fiscal and external sustainability boosting the tax revenues?
weaknesses and laying the Esther Perez Ruiz: Pakistan needs to significantly
mobilize revenues to create resources for much needed
foundation for strong, social and development spending, strengthen
sustainable, and inclusive growth sustainability, and reduce overreliance on external
financing. Overall, it is essential for Pakistan to increase
the progressivity, simplicity, and fairness of the tax
system so that those who can afford it contribute their
In addition to supporting sound policy making, the IMF fair share. This requires efforts on both tax policy (e.g.,
supports Pakistan by building technical capacity in increasing taxation of agriculture and property) and
public institutions. During the caretaker period, we revenue administration. Strengthening the FBR and its
have been working closely with the authorities and governance is critical to achieving these goals. We
collaborating with other international organizations welcome the focus on digitalization to effectively expand
and development partners on key capacity the tax base. Similarly, building a culture for enhanced
development initiatives to durably raise revenue and transparency, accountability and separation of the tax
improve the quality of spending to tackle social and collections and policy functions, as intended by the
climate-related challenges. restructuring plan under consideration, are steps in the
right direction.
ICMA: How do you see the current economic
ICMA: Pakistan’s Debt service requirements is
situation in Pakistan, especially the key challenges
estimated at US$25 billion in 2023–24. Do you think
facing the economy?
debt rescheduling is the only option left for the
Esther Perez Ruiz: Pakistan’s economic and financial Government?
position has strengthened over the course of this fiscal Esther Perez Ruiz: It all depends on the authorities’
year, with gradual disinflation underway and external taking policy and reform actions commensurate with
pressures easing on the back of prudent policy addressing Pakistan’s economic imbalances.
management and the resumption of inflows from
multilateral and bilateral partners. However, sustained
reform efforts are needed to address Pakistan’s
deep-seated economic vulnerabilities amidst the ongoing
challenges posed by elevated external and domestic Consistent implementation of
financing needs and an unsettled external environment.
sound policies should ultimately
To cement the stability established over the past 9
months, consistent sound policy making needs to lead to higher public and private
continue. In this vein, the authorities are determined to
deliver the FY24 general government primary balance sector savings but also attract
target of 0.4 percent of GDP, continue efforts towards
broadening the tax base, and implement timely power
foreign financing for productive
and gas tariff adjustments so that there is no investments at lower cost that can
accumulation of circular debt (CD) in FY24, while the
vulnerable are protected through the progressive tariff foster private-led growth and the
structure applied to energy. The State Bank of Pakistan
remains committed to maintaining a prudent monetary build-up of reserves

Exclusive Interview
inefficiency of this sector and improve the quality of

public service provision to the private sector.
Stronger focus on good  Establishing a competitive and level playing field
governance, transparency, and with strong public sector governance, free of
preferential treatment, to further encourage private
the institutional environment savings and private investment.
Allowing a fully-flexible exchange rate that promotes
that respects the rule of law 
export-oriented activities, and broadening reforms to
are critical for economic reduce energy sector costs while also allowing a
reduction in tariffs for businesses.
stability and growth. ICMA: What new measures the Pakistani policymakers
must take to enhance the competitiveness of the
Professional accountants have economy?
a particular important role to Esther Perez Ruiz: Exports as a share of GDP have fallen
markedly over the past two decades. Boosting export
play in this respect competitiveness is essential to reducing external
vulnerabilities, reversing Pakistan’s productivity decline,
and increasing its growth potential. In addition to the
Consistent sound policy making and strong ownership of policies already discussed, the agenda requires reducing
long-delayed reforms can enable Pakistan to protect any anti-export bias by implementing the national tariff
macroeconomic stability and bolster growth, access the policy and gradually reducing import duties in Pakistan
financing from external partners, and eventually return which, averaging 20 percent, remain amongst the
to the market. The Pakistani authorities can develop such highest in the world and directly harm exporters by
a program, with key efforts that include (i) strengthening incentivizing import substitution.
public finances and broadening the tax base (including The modernization of export promotion schemes is also
to undertaxed sectors) to make the tax system simpler, necessary to reduce reliance on unconditional subsidies
fairer and more efficient; (ii) restoring the energy sector’s (e.g., Export Finance Scheme and the Drawback of Local
viability by accelerating cost reducing reforms which Taxes and Levies). These schemes have proved costly for
should allow CD-neutral tariffs to decline; (iii) monetary taxpayers and with limited impact on exports. In this
policy aimed at returning inflation to target, with a vein, we welcome the authorities’ recent actions to phase
flexible FX market supporting external rebalancing and out SBP’s involvement in the refinancing schemes and
the rebuilding of foreign reserves; and (iv) establishing an task the Ex-Im Bank with allocating subsidized lending
environment conducive to private-led activity through schemes against budget resources in a fairer and more
the removal of distortionary protection, advancement of transparent manner.
SOE reforms to improve the sector’s performance, and ICMA: Any special message to our readers, especially
the scaling-up of investment in human capital. professional accountants?
ICMA: How Pakistan can become a self-reliant country Esther Perez Ruiz: With a large domestic market, young
so that it can reduce its dependence on foreign loans? labor force, an entrepreneurial orientation, a privileged
Esther Perez Ruiz: The policy and reform areas already location, and extensive donor support and market
discussed are central to reducing reliance on foreign access, Pakistan has the potential to become a dynamic,
emerging market economy. To unleash this potential,
loans, but also making the foreign loans more productive
there is a need for sustained and consistent
and affordable. Consistent implementation of sound
implementation of good policies oriented to maintaining
policies should ultimately lead to higher public and
macroeconomic stability and putting in place the
private sector savings but also attract foreign financing
conditions for private-led growth. In this respect,
for productive investments at lower cost that can foster
stronger focus on good governance, transparency, and
private-led growth and the build-up of reserves. Key
the institutional environment that respects the rule of
policy goals in this regard include:
law are critical for economic stability and growth.
 Reducing the crowding out of private investment by Professional accountants have a particular important role
the government by creating fiscal surpluses, to play in this respect.
supported by broader and fairer tax revenue. The Editorial Board thanks Ms. Esther Perez Ruiz, IMF Resident
Improving the quality of public investment and SOE Representative in Pakistan for sparing from her precious time to give
reforms will reduce the fiscal cost of the existing exclusive interview for Chartered Management Accountant Journal.

Exclusive Interview Exclusive Interview
Exclusive Interview
Mr. Atif Ikram Sheikh

President, The Federation of Pakistan
an
Chambers of Commerce & Industry (FPCCI)
PCCI)
“ To fix the recurrent economic crisis,

sis,
it is crucial to look towards nations like
Turkiye and Indonesia, which have
ke
effectively navigated away from IMF

dependencies, as models for
successful policy-making
“
ICMA: How does FPCCI assess the current economic businesses including contractionary monetary policy,
situation in Pakistan and its recent engagements with removal of tax exemptions, adoption of a flexible
the IMF? exchange rate, and increased energy tariffs. Analyzing
President FPCCI: The incompatibility between the IMF past IMF engagements, the average industrial growth
programs and the evolving dynamics of Pakistan's and GDP growth were lowered by 2.27 and 1.44
economy has emerged as a significant challenge with percentage points respectively during periods when
most of the IMF reforms appearing counterproductive Pakistan underwent IMF programs as compared to
such as curbing supply-driven inflation through periods without IMF programs. The FPCCI has raised
persistent raises in the policy rate and adoption of a concerns over these reforms increasing operational costs
flexible exchange rate which only increased the volatility for businesses, challenging their competitiveness both
of the Pakistani rupee and have adversely impacted the domestically and internationally.
economic growth. FPCCI has always emphasized ICMA: What strategies does FPCCI propose for
building a consensus on the long-term economic plan addressing Pakistan's debt burden?
with clear objectives and economic targets, specifically
President FPCCI: Addressing Pakistan's debt burden
tailored to Pakistan's economic context. To fix the
involves strategic and prudent debt management. The
recurrent economic crisis, it is crucial to look towards
FPCCI, in its research report titled "Impact of IMF
nations like Turkiye and Indonesia, which have effectively
Programs: A Context of Pakistan," proposes several
navigated away from IMF dependencies, as models for
strategic measures. These include aligning monetary
successful policy-making.
policy with fiscal outcomes and reducing the policy rate
ICMA: As per FPCCI, what are the implications of IMF to reduce the debt servicing cost that adds on every year.
conditions on Pakistani businesses? Secondly, reprofiling (shifting to long-term domestic
President FPCCI: The engagement of Pakistan with the debt during low inflation) and restructuring of both
IMF typically necessitates economic reforms that impact domestic and external debt is inevitable to mitigate the
country's escalating debt issues.
8 ICMA’s Chartered Management Accountant, Mar-Apr 2024 5

Exclusive Interview
ICMA: How is FPCCI addressing the impact of rising

energy costs on manufacturing, particularly textiles,
We advocate for robust fiscal and and what steps are being taken to secure discounted
energy tariffs for sustaining exports?
tax reforms aimed at stabilizing
President FPCCI: The soaring energy costs for industrial
the economy and fostering an consumers have reached unprecedented levels. If this
trend persists, businesses may be forced to resort to
environment conducive to both drastic measures such as employee layoffs and plant
closures to maintain viability. At FPCCI, we are steadfastly
local and foreign investments. advocating for government intervention through official
For instance, joint ventures correspondences, press conferences, and other avenues
to alleviate the burden of energy tariffs on industrial
between Pakistan and China consumers. One potential solution to mitigate input
costs is to explore captive power generation options
hold promising potential to utilizing solar or wind energy. However, the current
interest rates pose a significant obstacle to implementing
bolster export-oriented this alternative.
ICMA: How can Pakistan's tax system be improved to
support business growth? What is your take on FBR
Additionally, the development of bond markets would Restructuring Plan proposed by the Caretaker
allow corporate sectors to access other debt sources, Finance Minister?
ultimately increasing the competition and optimizing the President FPCCI: Efforts to enhance Pakistan's tax
cost of debt. system for fostering business growth involve simplifying
ICMA: What are the current challenges for businesses tax procedures, embracing digitalization, restructuring
in Pakistan, and how does FPCCI intend to collaborate the Federal Bureau of Revenue (FBR) to separate tax
with the government to address them? policy and collection functions, consulting with business
representatives like the Federation of Pakistan Chambers
President FPCCI: The high inflation, steep mark-ups, and
of Commerce and Industry (FPCCI), supporting small and
stagnant industrial growth threatening job security,
medium enterprises (SMEs) through favorable policies,
coupled with complexities such as import restrictions
addressing industry-specific challenges, and ensuring
and banking issues hampering foreign exchange
inclusion of business organizations in decision-making
transactions, the challenges are indeed daunting. These
processes. These measures aim to streamline operations,
obstacles are further compounded by a narrow tax base
promote transparency, curb corruption, address industry
and heavy reliance on borrowing, resulting in escalating
concerns, and foster collaboration between the
internal debts of Rs. 42.59 trillion and external debts of
government and the business community to drive
Rs. 22.6 trillion in December 2023. These fiscal
economic development and stability.
imbalances, in turn, constrain resources for vital social
welfare and development programs, while the power
sector's circular debt adds to the financial strain, standing
at Rs. 2.61 trillion as of October 2023. The soaring energy costs for
FPCCI is steadfast in its commitment to collaborating industrial consumers have
closely with the government to confront these
challenges head-on. We advocate for robust fiscal and tax reached unprecedented levels.
reforms aimed at stabilizing the economy and fostering
an environment conducive to both local and foreign If this trend persists,
investments. For instance, joint ventures between
Pakistan and China hold promising potential to bolster businesses may be forced to
export-oriented sectors. Our goal is to align with the resort to drastic measures such
government's priorities in driving economic recovery,
alleviating poverty, and generating employment as employee layoffs and plant
opportunities. Together, through concerted efforts, we
can navigate these obstacles and pave the path toward closures to maintain viability
sustained growth and prosperity for Pakistan.

9
Exclusive Interview
Business community and FPCCI support the

restructuring plan of the Federal Board of Revenue (FBR) The persistently high policy
as visualized by Dr. Shamshad Akhtar, Federal Caretaker
Minister for Finance & Revenue. The underlining principle
rate of 22 percent has significantly
of separation of tax policy and collection functions will hampered the operational
help resolve contradictions, conflict of interest and
maladministration; and, that’s why, FPCCI supports the capabilities of businesses in Pakistan,
restructuring proposals. The bifurcation of inland
revenue and customs will streamline the operations of making the cost of borrowing
FBR; and, will not only align it with international best
practices, but also remove the concerns of international excessively high for the local
financial institutions like IMF, World Bank, and Asian
Development Bank. This is specifically important in
business community and stifling
Pakistan’s peculiar case as the country will continue to investment and expansion plans for
depend on external financing for the foreseeable future.
It is also a longstanding demand of the entire business, businesses, especially for SMEs .
industry, and trade community of Pakistan to implement
complete digitalization and transparency of FBR
operations to deal with harassment of the business and lay the groundwork for sustainable economic
community at the hands of tax officers and unnecessary development. FPCCI's analysis of foreign direct
issuance of tax notices. investment (FDI) trends over the past two decades
highlights untapped opportunities in sectors like
ICMA: What policy changes does FPCCI suggest to boost Electrical Equipment, Petrochemicals, Leather, Minerals
the competitiveness of Pakistani exports globally? to Chemicals, Light Engineering, Warehousing, and Mass
President FPCCI: In its pursuit of bolstering the export Transit. Particularly, the chemical industry stands out for
sector, FPCCI advocates for a multifaceted strategy. This its potential to yield billion-dollar exports with the
approach involves streamlining export procedures, support of joint ventures between minerals and chemical
improving infrastructure development, and actively industries, recommended by FPCCI to the Board of
promoting exports through trade missions and Investment (BOI). Unlocking this potential can
participation in international fairs. Moreover, the FPCCI substantially boost economic growth by addressing the
also emphasizes the critical importance of maintaining current underinvestment and maximizing the export
stringent quality standards, facilitating accessible finance value of high-quality products.
for exporters, and ensuring stable policies. These ICMA: Does the sustained policy rate of 22 percent by
collective measures are essential for creating a conducive the SBP for several months bode well for trade and
environment that is favorable for export-driven growth. industry growth, particularly in addressing inflation
Looking forward, Pakistan recognizes the urgent need to in the country?
prioritize identifying investment opportunities within its President FPCCI: Obviously, not. The persistently high
Special Economic Zones (SEZs). Leveraging its abundant policy rate of 22 percent has significantly hampered the
and affordable labor force, coupled with its untapped operational capabilities of businesses in Pakistan, making
mineral potential, presents a significant avenue for the cost of borrowing excessively high for the local
economic advancement. Notably, strategic partners such business community and stifling investment and
as KSA, China, UAE, and Kuwait have demonstrated a expansion plans for businesses, especially for SMEs. This
keen interest in Pakistan's mineral resources, offering financial environment has led to a situation where an
promising opportunities for collaboration and growth. overwhelming majority of available credit, approximately
ICMA: How does FPCCI assess the effectiveness of 70-75%, is absorbed by the government, as banks show a
recent government initiatives to attract foreign direct preference for lending to the government at these
investment, and what more can be done? elevated rates over businesses. This, along with several
other factors, has led to a situation where a mere 7% of
President FPCCI: Recently, the Pakistani government
Pakistani firms obtain financing through formal lending
established the SIFC committee, signaling a commitment
channels, as reported by the World Bank.
to fostering growth across various sectors including
high-tech industries, renewable energy, agriculture, The Editorial Board thanks Mr. Atif Ikram Sheikh, President, The
e-commerce, logistics, value-added textiles, the food Federation of Pakistan Chambers of Commerce & Industry (FPCCI) for
sparing from his precious time to give exclusive interview for Chartered
value chain, and minerals. By prioritizing these sectors, Management Accountant Journal.
Pakistan aims to attract significant foreign investments
10 ICMA’s Chartered Management Accountant, Mar-Apr 2024 5

Exclusive Interview
Exclusive Interview
Dr. Hafiz A. Pasha

Form Federal Minister for Finance and
Former
Professor Emeritus Beaconhouse
P
N
National University (BNU) Lahore
“ The current IMF program is

Stand-by Facility of nine months with
a loan amount of $3 billion. It has
contributed to a significant increase
in foreign exchange reserves and
helped in stabilizing the economy
“
ICMA: In your view, what role does the IMF play in ICMA: What are the major challenges facing
shaping economic reforms in Pakistan? Pakistan’s economy, especially concerning the
repayment of loans?
Dr. Hafiz A. Pasha: IMF supports Pakistan in managing a
difficult economic situation in which foreign exchange Dr. Hafiz A. Pasha: Despite the recent increase in the
reserves have fallen to a critically low level. This is foreign exchange reserves, they still remain low at under
achieved through extension of loan under a special $8 billion. This provides import cover for only one and a
facility. Disbursement of this loan is conditional on half months. The ‘safe’ level is three months.
implementing the agreed agenda of reforms and Pakistan’s annual external financing requirement is $18 to
meeting the performance criteria with the objective of $20 billion, net of likely rollovers. There has been no inflow
stabilizing the economy. of funds from private creditors this year, because of the low
ICMA: How would you assess the current IMF credit rating, despite the umbrella of an IMF program.
program, particularly in terms of the established Achieving the annual external financing requirement is
targets and their attainment? the biggest challenge today.
Dr. Hafiz A. Pasha: The current IMF program is Stand-by ICMA: How do the conditions set by the IMF impact
Facility of nine months with a loan amount of $3 billion. It Pakistan’s economic landscape?
has contributed to a significant increase in foreign Dr. Hafiz A. Pasha: The actions and reforms agreed to
exchange reserves and helped in stabilizing the with the IMF focus primarily on stabilization of the
economy. The first review was successfully completed economy by reduction especially in the current account
and the second and last review is currently under way. deficit and the budget deficit. This requires more
The IMF may ask for gas and electricity tariff increases intensive use of the policy instruments of exchange rate
and some taxation proposals to ensure that the FBR depreciation, hike in interest rates and tax rates, and
meets the annual revenue target. expenditure cuts.

Exclusive Interview
changes will have to be made in the level and

composition of allocations of public expenditure to
The energy sector of Pakistan has education and health.
ICMA: Does Pakistan consistently require support
emerged as a ‘black hole’ in the from IMF?
economy. Fundamental steps will Dr. Hafiz A. Pasha: Pakistan has been a country which is
notorious for its very frequent resort to IMF Programs.
have to be taken to reduce the Since 1988, Pakistan has been in 23 programs, but has
successfully completed only one program. It is hoped
very high transmission that when Pakistan goes shortly for its 24th program with
distribution and billing losses of the IMF, spread over the next three years, a
comprehensive and strong set of reforms will be
over 23%, while moving towards implemented such that the country then finally embarks
on the path of self-reliant, sustainable, and relatively
renewable energy rapid growth.
ICMA: What other avenues can Pakistan explore
instead of depending on the IMF?
This is accompanied by a short-run increase in the rate of
inflation and some slowdown in the growth process in Dr. Hafiz A. Pasha: The SIFC has set a very ambitious
the process of stabilization. target of attracting foreign direct investment into
Pakistan to solve the balance of payments problem
ICMA: How can Pakistan navigate IMF conditions
while protecting its economic interest and priorities?
Dr. Hafiz A. Pasha: The process of stabilization is likely to
accompanied by rise in the level of unemployment and
the incidence of poverty. Therefore, a program of social
Foreign direct investment is likely
protection and relief for the poor will need to be to increase only after the
simultaneously put in place.
ICMA: Are there specific sectors or areas where you
economy has stabilized. There will
believe Pakistan should concentrate its efforts to simultaneously also be a need for
enhance stability and secure a more stable future?
Dr. Hafiz A. Pasha: The first priority is for raising the level
political stability to stimulate
of exports, through appropriate steps to increase both domestic and foreign
competitiveness and achieve greater diversification. Next
in importance is significantly enhancing the tax-to-GDP investment in the country
ratio, which has fallen in recent years. This requires the
implementation of progressive tax reforms, leading to
more effective taxation of sectors like real estate, and accelerate the process of growth. However, since
wholesale and retail trade, and agriculture. its formation there has been no upsurge yet in this
Further, there is need for rationalization of federal current inflow. There is, in fact, no substitution to
expenditure, focusing especially on reduction in costs of implementation of a comprehensive agenda of
running the civil administration, subsidies, grants and reforms to stabilize the economy, preferably under the
pensions. umbrella of an IMF Program. Foreign direct investment
is likely to increase only after the economy has
Also, the energy sector of Pakistan has emerged as a stabilized. There will simultaneously also be a need for
‘black hole’ in the economy. Fundamental steps will have political stability to stimulate both domestic and
to be taken to reduce the very high transmission foreign investment in the country.
distribution and billing losses of over 23%, while moving
The Editorial Board thanks Former Federal Minister for Finance and
towards renewable energy.
Professor Emeritus Beaconhouse National University (BNU) Lahore
The level of human development of Pakistan has also for sparing from his precious time to give exclusive interview for
now fallen from the medium to the low level. Appropriate Chartered Management Accountant Journal.

CORPORATE
LEADERS OF ICMA
Muhammad Rafique [F-1313]

Chief Financial Officer
Baron Pakistan Limited - Islamabad
Mr. Muhammad Rafique is currently serves as the Chief Financial Officer at Baron
Pakistan Limited. He is a Chartered Management Accountant and holds fellowships
from the Pakistan Institute of Public Finance Accountants (PIPFA) and the Institute of
Corporate Secretaries of Pakistan (ICSP). Additionally, he has prestigious certifications as
a PICG-certified director and a certified fraud examiner (CFE) from the USA. With extensive experience across
various industries, he has held roles such as finance controller, deputy executive director, general manager
finance, director finance, chief financial officer, and chief executive officer in different corporate entities. He has
also served as a Director on the Board of both listed and unlisted companies and has been actively involved in
executive committees and volunteer committees for non-profit entities and retirement funds management.
Furthermore, he has provided training as an authorized employer to affiliates of globally renowned professional
bodies such as CIMA, ICAEW, and ACCA.
“The Chartered Management Accountancy (CMA) credential from ICMA is highly respected both domestically and
internationally. Over time, prominent global accounting organizations have been extending either full or partial
equivalency, encouraging professionals to pursue their memberships. In Pakistan, our professional status is
mandated by law for conducting cost audits in diverse manufacturing firms and for occupying senior roles like
company secretary, Chief Internal Auditor, and Chief Financial Officer in listed companies. Prospective employers take
pride in hiring CMAs for various positions as they possess abundant expertise, knowledge, and strategic acumen,
facilitating their seamless integration into the industry.”
Asim Mirza [F-2278]

Chief Financial Officer
Bhanero Textile Mills Limited- Karachi
Mr. Asim Mirza is currently serving as the Chief Financial Officer at Bhanero Textile Mills
Limited, Karachi, is a Fellow member of ICMA International and CPA Australia. He brings
extensive experience primarily in the textile sector, specializing in both manufacturing
and retailing of fashion garments. With a remarkable ability to thrive in diverse
corporate environments, he has amassed a successful 22-year tenure in C-level positions
within the country's leading textile groups. His areas of expertise encompass internal
audit and controls, management accountancy, regulatory and legal affairs, treasury, corporate finance, risk
management, and financial reporting.
“While possessing a professional qualification such as ICMA lays a solid foundation for advancement in one's career,
relying solely on academic achievements is insufficient for success in the professional realm. Instead, emphasis should
be placed on continuous learning, cultivating robust communication skills, and striving for self-improvement."

Focus Section
Focus Section
IMF, Political Will, And Declining

Investments in Pakistan -
When will the Saga end?
The writer has contributed this article exclusively for the current issue of CMA Journal
S ocial media is flooded with glamorous footage of an

industry magnate’s pre-wedding celebrations in the
arrangement. Seeking
assistance from the IMF Muhammad Azfar Ahsan
neighboring country. The point to note is the presence of has become a recurrent Pakistan's former
global investors, and tycoons who have come down to event in Pakistan, with Minister for Investment
enhance business targets by investing in the Special the intervals between
Economic Zones and collaborative ventures. New visits notably shrinking over the years. Between 1958
international brands are being launched on the side, and 1988, Pakistan entered 11 lending commitments
enabling the country to go way beyond the US$80 billion with the IMF, while in the more recent period of
in Foreign Direct Investment (FDI) in 2022. On the 1993-2001, eight lending commitments were made in
contrary, Pakistan reported a meagre and stagnating FDI. less than one-third of the previous timeframe.
Reviewing the FDI data, it comes as no shock (for I had Pakistan stands fifth globally in terms of outstanding
predicted this)- in the first half of FY24, Pakistan only debt to the IMF, reaching a total of US$7.4 billion. In the
received US$863 million, which is up by 35%. For a fiscal year 2023, Pakistan received a significant amount of
country with over 250 million people, this is not enough. US$894 million from the IMF, with charges and interest
Despite earnest efforts by the Special Investment payments reaching US$776 million and US$325.8 million,
Facilitation Council (SIFC) to create an enabling respectively. The noteworthy figure for 2022, totaling
environment for businesses and investors, the US$1.64 billion, highlights the country's growing
anticipated surge in FDI has remained elusive. financial reliance on the IMF, prompting concerns about
The investment sector in Pakistan has consistently held its economic challenges and developmental initiatives.
potential opportunities, yet its advancement has The IMF is strictly for economic stability and growth,
frequently faced interruptions due to bureaucratic red through financial aid, policy guidance, and technical
tape or lack of political will, political instability, and, most support to its member countries. The focus is on various
significantly, unpredictable shifts in the policy objectives, including the promotion of macroeconomic
framework. The prevalence of uncertainty in the stability by collaborating with nations to maintain low
environment has led existing investors to question their inflation, stable exchange rates, and sustainable fiscal
sustainability, while potential investors find compelling and monetary policies. It actively works to prevent and
reasons to refrain from committing funds for future address financial crises; aiding countries facing balance
returns in Pakistan. of payments issues to stabilize economies and restore
The financial situation enters the red zone investors’ confidence.
intermittently compelling Pakistan to seek advice from Additionally, the IMF advocates exchange rate stability,
the International Monetary Fund (IMF), way too often - facilitates poverty reduction through social measures,
23 lending programs so far. Pakistan has recently supports capacity-building in member countries for
entered another IMF standby arrangement, amounting effective economic policy implementation, and serves as a
to US$3 billion, with an initial payment of US$1.2 billion platform for international economic cooperation. Through
and the remaining US$1.2 billion scheduled to be regular financial surveillance and assessments, the IMF
disbursed over the nine-month duration of the identifies global economic risks and vulnerabilities.

Focus Section
But this all comes packaged in stringent parameters

impacting not the population at large, but the taxpayers
- a small segment of salaried class and
“ The fact is that Pakistan, as a
business hub, is not thriving. It is a
corporate/businesses in Pakistan.
The widespread apprehension surrounding the potential company of 240 million employees
social and political ramifications of stringent IMF challenged with basic literacy and
conditions is valid. The prospect of increased taxes and
reduced subsidies has raised concerns about skill development, with an elite
exacerbating the burden on an already strained tax base,
potentially leading to social unrest and economic senior management enjoying the
instability. To mitigate these risks, the obvious answer is
improvised tax reforms, including broadening the tax
profits as rewards, and that has no
base to encompass historically exempt sectors such as permanent or unified authority for “
agriculture, real estate, and retail trade, long-term
framework of investment policies to attract FDI, and decision making
favorable initiatives for the local investors. In fact, I would
like to quote the State Bank of Pakistan’s (SBP)s Former
Governor Salim Raza, at the “Agri connections 2023”, (ASEAN) is a fitting example of market expansion for
stating that Pakistan’s agriculture sector has the potential individual growth of each member nation. The strategic
to overcome the current account deficit and location that Pakistan has, puts it directly in the path of
balance-of-payment crisis within six years. With this level China and Russia both, and a perfect path for the double
of potent capacity for resolutions, our reformative work landlocked Afghanistan and the Central Asian Republics
remains suspended. (CARs.) With 91% of its border aligning with India, Iran,
Afghanistan, and China, Pakistan could not make a
The government infrastructure would necessitate the
success of either Regional cooperation for Development
Ministries of Finance, Revenue, and Investment to
(RCD) with Iran and Turkey, or South Asian Association for
spearhead the financial regulatory drive, but we have
Regional Cooperation (SAARC) and lately China Pakistan
SIFC tasked with ensuring fiscal relief, while maintaining
Economic Corridor (CPEC). What prevents us is primarily a
market clarity. This is a replication of roles and
lack of vision, which is directly associated with
assignments and indeed stands to create complexity
‘incompetency’ – a word that I have used repeatedly as
with the new government taking charge. In the interest
the foremost reason for the drag.
of consolidation of democratic infrastructure, the public
institutions should be prioritized, yet supported with Kazakhstan, with a population of 20 million managed to
the collaborative framework of public, private and secure an impressive US$28 billion in FDI in 2022. They
military stakeholders. are hoping to up it for 2023 and of 2024 will show a
remarkable surge. They are a true example of focused
The China-Pakistan Economic Corridor (CPEC) came as a
work with facilitation for the investor. Pakistan must aim
game changing opportunity. The traditional critics of
to emulate such successes, catalyzing its economic
the Pakistan economic policies could not stop praising
progress, and fostering a favorable investment climate
the project and its future outcomes for the country. Yet
for both domestic and international investors.
the hurdles mentioned above landed the stellar project
into hibernation. The overseas Pakistanis remitted US$2.4 billion in
January 2024, registering an increase of 1%, compared
Meanwhile, the Chinese government has progressed
with US$2.38 billion received in December 2023.
with its regional plan, currently overlooking Pakistan's
Similarly, compared with the same month of 2023, there
significant strategic location asset. Beijing's strategy aims
was a significant uptick, with remittances rising by 26%
at utilizing economic and political collaboration to
to US$1.9 billion.
bolster the political and economic objectives of the
South, contributing to the establishment of a fair and The overall remittance inflows for the first seven months
equitable international order. A central aspect of China's of FY24 (July to January) stood at US$15.83 billion,
foreign policy is to secure African support globally, posting a 3% year-on-year decrease of US$386 million
especially within the United Nations. China endeavors to from the US$16.32 billion recorded in the same period of
secure African backing by highlighting commonality as FY23. Remittances are not investments and though the
developing nations, underscoring shared strategic numbers generate hope, they are way behind our
interests and a unified stance on major international competitive economies.
issues, effectively minimizing potential disagreements. The key understanding is that domestic policies always
Pakistan stands as a crucial conduit in this context. attract and optimize FDI. It must be emphasized, even at
Regional economy and regional collaboration are the the risk of repetition, that without addressing policy
new requisites for planning an upward trajectory for issues and facilitating existing investors, sustainable FDI
nation’s business. Association of Southeast Asian Nations cannot be attracted.
Focus Section
fiscal discipline and monetary stability through sound
“ My recently found assurance

and hope is the appointment of
macroeconomic policies is vital for investors’ confidence
and overall economic growth. Warren Buffett's quote
underscores the importance of patience and a strategic
approach to investment in Pakistan, emphasizing
Muhammad Aurangzeb, as Federal long-term growth over short-term gains. Overcoming
Minister Finance & Revenue. The domestic constraints, such as security issues and
governance weaknesses, is key to maximizing the benefits
gentleman has delivered on all of FDI and achieving broader economic objectives.
A concerted effort from government, businesses, and
accounts and has the most stakeholders is necessary to transform Pakistan's
impressive portfolio for turning “ investment landscape, involving regulatory reforms,
infrastructure development, security enhancement, and
the situations economic stability maintenance to attract both domestic
and foreign investors, fostering sustainable economic
growth and prosperity.
This has been the consistent message advocating the
investment landscape. Pakistan is currently registering My recently found assurance and hope is the
stagnant FDI figures, with decreasing market volatility appointment of Muhammad Aurangzeb, as Federal
pushing its strength of location and population to Minister Finance & Revenue. The gentleman has
irrelevant data for the regional economies. delivered on all accounts and has the most impressive
portfolio for turning the situations. Given long term
Warren Buffett, the legendary investor, and Chairman of policies, and space to devise stratagems, Pakistan's new
Berkshire Hathaway, once remarked, "The stock market is economic team is competent to pave the way for
designed to transfer money from the Active to the significant advancements in attracting foreign direct
Patient." In the context of Pakistan, it underscores the investment (FDI).
significance of adopting a patient and strategic approach
to investment, focusing on long-term growth and 250
sustainability rather than short-term gains. 211.111
200 172.596
164.730
The Kingdom of Saudi Arabia, and the Peoples Republic 150.112 141.953
150 126.818 122.461 131.374 131.172
of China, have both displayed individual, organic yet 116.763
dynamic approach towards economic progress. Both 100 83.250
have played into indigenous strengths, used technology 50

to beat the challenge and have come out as the leading
0
power hubs. Pakistan enjoys strong goodwill with both
countries but seems to have lost their trust in its -50
potential. The reasons begin and end with the lack of -100
political will and incompetency in the people at the helm
-150 -173.171
of affairs. While we know the problems, and sadly the
solutions, we seem to have reached a stalemate. Listing -200
Mar '23 Apr '23 May '23 Jun '23 Jul '23 Aug '23 Sep '23 Oct '23 Nov '23 Dec '23 Jan '24 Feb '24
either would be repetitive and futile. The fact is that
Pakistan, as a business hub, is not thriving. It is a company Foreign Investment: Direct Investment
of 240 million employees challenged with basic literacy

and skill development, with an elite senior management In the present circumstances of economic volatility,
enjoying the profits as rewards, and that has no including inflationary pressures, fluctuating exchange
permanent or unified authority for decision making. rates, and unfavorable taxation, investors are justifiably
Establishing a consistent and predictable policy hesitant to commit capital, fearing potential losses due to
framework is essential to attract long-term investments, adverse economic conditions. I look at the declining
emphasizing the need for the governments to prioritize graph and then towards the new decision makers to help
continuity of policies, engage stakeholders in major the situation. The government must simplify and
reforms, and provide clear guidelines to foster a stable streamline regulatory procedures, implement online
investment environment. Infrastructure investment, platforms for regulatory approvals, remove bureaucratic
particularly in energy, transportation, and hurdles, and ensure transparency in decision-making, to
telecommunications, is crucial for economic growth, job expedite investment processes and enhance investors’
creation, and overall investment climate improvement. A confidence. The IMF should be the guideline for monetary
comprehensive approach to addressing security concerns, planning to ensure that there is no 24th run again.
involving law-enforcement, community engagement, and About the Author: The writer is Pakistan's former Minister for
diplomacy, can mitigate risks for the investors. Maintaining Investment. He can be reached at @MAzfarAhsan

Focus Section
IMF Partnership and

Pakistan's Economic Future
S ince the conclusion of World War II, the International
Monetary Fund (IMF) has wielded significant influence
1) Comprehensive
Framework
over the global economy. Established on December 27, and Missed
1945, with headquarters in Washington, D.C., the IMF boasts Opportunities:
190 member countries and serves as a lender of last resort to
national governments. Its pivotal role extends to • The EFF aimed to
maintaining exchange-rate stability and fostering global create a robust found-
monetary cooperation. The IMF's overarching mission ation for Pakistan’s
includes ensuring financial stability, facilitating international economy by strength-
trade, promoting robust employment, sustainable ening fiscal and
economic growth, and alleviating poverty worldwide. external sustainability.
Pakistan's economic journey has been closely intertwined • Structural and insti- Muhammad Azam, ACMA
with the IMF. Throughout its history, the IMF has played a tutional reforms were General Manager
crucial role in extending financial assistance and providing crucial for fostering [Finance & Accounts]
policy guidance to Pakistan amid challenging economic balanced growth. Al-Haj Automo ve (Pvt) Ltd.
circumstances. Since its inception, Pakistan has repeatedly
• Unfor tunately,
sought IMF support to navigate various economic challeng-
incomplete and uneven policy execution hindered
es, resulting in the country benefiting from 23 IMF loan
progress.
programs. However, these interventions have not been
devoid of controversy, often accompanied by stringent 2) Early Progress and Subsequent Setbacks:
conditions with far-reaching implications for Pakistan's
economy and society. The economic landscape in Pakistan • Initially, there was encouraging progress, including
has encountered significant headwinds, resulting from a fiscal adjustments and transitioning to a flexible
confluence of factors such as in below table: exchange rate system.
• The establishment of a modern and independent
The policy implementation during the 2019–23 Exten- ded
central bank was a positive step.
Fund Facility (EFF) in Pakistan faced significant hurdles,
resulting in missed opportunities and potential costs for • However, these gains were not sustained over time.
the economy. Let’s delve into the key aspects:
Factors Outcomes
Ongoing Crisis and
2022 Floods The
livelihoods.
External Financing
Constraints economic stability.
approximately ¾ month of
Infla on Surge
Rapid price increases reduced the purchasing power of
challenges for policymakers.
Fiscal Pressures and Debt The floods, coupled with policy slippages, have intensified fiscal pressures.
Sustainability
Social Discontent and Eroded
Living Standards -
Escala ng Poli cal Tensions

Focus Section
3) Unprecedented Shocks and Steps to be taken for Pakistan’s

Eroded Commitment:
Future Growth
• COVID-19 pandemic in 2020 and devastating floods in
a) Poverty Reduction and Social Protection
2022 disrupted economic growth.
To significantly reduce poverty and strengthen social
• Inflation surged, exacerbating social pressures. protection, increased focus and investment in social
• Pressure from vested interests complicated policy spending are necessary. The IMF has commended the
adherence. enhancements made to the Benazir Income Support
Program (BISP), including expanding its reach to more
4) Energy Sector Challenges and Exchange beneficiaries and adjusting benefit levels for inflation.
Rate Interventions: However, the IMF emphasizes the ongoing need to improve
the generosity of BISP stipends and ensure that all deserving
• Deep-rooted issues in the energy sector remained families are enrolled in Conditional Cash Transfer (CCT)
unresolved. schemes.
• Pursuing expansionary policies for rapid growth had b) Inflation Control
unintended consequences.
The IMF has strongly criticized the State Bank of Pakistan
• Foreign exchange interventions to stabilize the (SBP) for its management of inflationary pressures.
exchange rate proved challenging. According to the IMF, the SBP's monetary policy has lagged,
not reacting promptly to the increasing inflation from 2020
In hindsight, addressing these complexities requires a
onwards. The IMF staff report emphasizes several important
holistic approach, long-term commitment, and adaptive
points:
policy measures.
• Tightening Monetary Policy: IMF emphasizes that
The fiscal effort outlined in the FY24 budget represents a monetary policy should remain tight, proactive, and
crucial stride toward ensuring fiscal sustainability. However, data-driven. While the recent policy rate hike is a positive
it must be complemented by further reforms. The step, the tightening cycle should continue if necessary
consolidation proposed in the FY24 budget is appropriate, to combat inflation and support external rebalancing.
and it is reinforced by measures aimed at enhancing
revenue mobilization and curbing non-priority • Real Policy Rate: In the short term, the forward-looking
expenditures while safeguarding social assistance. To real policy rate needs to return to positive territory. This
mitigate significant risks related to macroeconomic stability measure aims to re-anchor expectations and achieve the
and fiscal sustainability, strict budget execution is SBP’s inflation objective over the medium term.
imperative. This entails restraint on current spending and • Refinancing Schemes: Implementing the plan to phase
vigorous efforts to boost revenue collection through out refinancing schemes will enhance monetary policy
enhanced tax administration. traction and bring transparency to these programs.
Looking beyond FY24, the focus should remain on • SBP Independence: The IMF underscores the
developing a more progressive, streamlined, efficient, and importance of strengthening and protecting the
equitable tax system. Such a system would create ample independence of the SBP.
room for critical development initiatives and social
A tighter monetary policy stance is critical for reducing
spending, including measures to strengthen resilience
inflation, anchoring expectations, and supporting external
against climate shocks. Improved public financial sector rebalancing. While the recent rate hike is welcome,
management is pivotal in maximizing the efficiency of our continued vigilance is necessary given the persistence of
limited resources inflationary pressures.
Challenges and Reforms c) Market determined Exchange Rate

• Pakistan grapples with persistent challenges such as To withstand external shocks, uphold competitiveness, and
fiscal deficits, external debt, inflation, and low foreign replenish international reserves, it's vital to let the exchange
exchange reserves. rate be determined by the market. This strategy encourages
inflows and promotes stability. Moreover, it's essential to
• IMF programs come with conditions, necessitating restore foreign exchange (FX) liquidity by allowing
reforms in areas like taxation, energy, and public sector unrestricted price signals. To accomplish this, it's crucial to
enterprises. avoid informal interventions in the market, such as
influencing import management and LC approval guidance.
• Implementing these reforms is crucial for Pakistan’s
These measures are necessary to regain public confidence in
economic stability and progress. the exchange rate system. Additionally, implementing
• Navigating these challenges requires concerted efforts, suitable monetary and fiscal policies along with robust
sound policies, and a commitment to sustainable reforms will bolster trust in the rupee and tackle external
development. imbalances.

Focus Section
d) Maintaining Financial Stability Economic Risks for Pakistan

Ensuring financial stability requires careful monitoring and
The risks associated with Pakistan’s economic situation are
quick responses to address undercapitalized financial
institutions. The State Bank of Pakistan (SBP) should speed exceptionally high and predominantly tilted to the
up the recapitalization process using its current authority. downside. These risks emanate from both domestic and
Furthermore, it's essential to prioritize the improvement of external factors. Let’s delve into the specifics:
bank resolution and crisis management frameworks.
1. External Headwinds: The global financial conditions
The discussion in the cabinet regarding a draft law should remain tight, and there are lingering effects of the war in
be accelerated for further legislative progress. Notably, the Ukraine, which have led to elevated food and fuel prices.
SBP must fully utilize its institutional autonomy, which was These external challenges pose significant hurdles for
recently granted under the amended SBP Act, as it forms the Pakistan’s economic stability.
bedrock of its independence and mandate.
2. Sociopolitical Climate: The difficult sociopolitical
Pakistan’s successful removal from the Financial Action Task
climate within Pakistan is characterized by persistent
Force (FATF) list is a positive development. However, efforts
to mitigate Money Laundering (ML) and Terrorist Financing political volatility. This instability poses a key risk to
(TF) risks, including those arising from tax evasion, effective policy implementation, potentially hindering
corruption, and other financial crimes, must be sustained. the country’s adjustment path and growth prospects.
e) Restoring the viability of Energy Sector 3. Advanced Economy Financial Tightening: The
tightening of financial conditions in advanced
Taking decisive action is crucial to restore the viability of
Pakistan’s energy sector. The financial health of the power economies could have spillover effects on Pakistan.
and gas sectors must be prioritized to prevent Geopolitical tensions further exacerbate the situation,
unsustainable spillovers affecting the national budget, impacting the availability of external financing.
financial institutions, and the real economy. Recent energy
4. Debt Sustainability: The materialization of these
measures, including the full surcharge hike and targeted
downside risks could push Pakistan toward an
subsidies for vulnerable populations, should be sustained as
an initial step in managing these spillovers. To achieve this, unsustainable debt situation. This precarious scenario
several key steps are essential: necessitates close monitoring, supportive technical
assistance (TA), and financing assurances from key
a) Timely Tariff Alignment: Ensuring that energy tariffs lenders.
align with actual cost structures, as determined by
NEPRA (National Electric Power Regulatory Authority) Despite these challenges, the IMF supports Pakistan’s
and OGRA (Oil and Gas Regulatory Authority), is critical. request for a 9-month Stand-By Arrangement (SBA) with
While doing so, it’s essential to protect vulnerable access equivalent to SDR 2,250 million (approximately 111
segments of the population. percent of quota). Additionally, the approval of the
b) Operational and Financial Reforms: Implementing exchange restriction and the Market-Based Currency Policy
reforms to reduce operational, generation, and capacity (MCP) is recommended. These measures are temporary,
development (CD) related costs is necessary. These non-discriminatory, and implemented for balance of
reforms should align with the current power and payments (BOP) reasons.
emerging gas Comprehensive Development and
Management Plan (CDMP) to gradually lower tariffs. In summary, Pakistan’s ongoing partnership with the IMF
remains critical for addressing economic challenges and
f) Structural Reforms: ensuring stability. Striking a balance between immediate
To lay the foundation for robust, resilient, and inclusive growth, adjustments and long-term structural reforms is essential
Pakistan must make tangible progress in the following areas: for sustainable development.
• State-Owned Enterprises (SOE) Governance: References:
Enhancing transparency, efficiency, and accountability
within SOEs. 1. imf.org/en/News/Articles/2024/01/11/pr2406-pak-imf-exec-
board-completes-first-review-of-the-stand-by-arrangement
• Anti-Corruption Institutions: Strengthening anti-cor-
ruption mechanisms to promote clean practices. 2. IMF Country Report No. 23/260 – July 2023
• Business Environment and Investment Climate: About the Author: Mr. Muhammad Azam, an Associate member
Creating a conducive environment for business and of ICMA and a Chartered Management Accountant, holds the
attracting investments. position of General Manager [Finance & Accounts] at Al-Haj
Automotive (Pvt) Limited. With more than 20 years of expertise in
• Climate Change Adaptation: Addressing climate-relat- Finance & Accounts, he specializes in process optimization and
ed challenges to ensure sustainable development. automation, focusing on manufacturing industries, and possesses
By addressing these priorities, Pakistan can pave the way for a a profound comprehension of process integration.
stronger, more prosperous future that benefits all its citizens.

Focus Section
Pakistan under IMF Program:

In Search of a Sustainable Solution
P akistan’s ties with the IMF began with a US$25 million
standby arrangement in 1958, but over time, frequent
targets makes macroeco-
nomic stability's core
engagements became a routine course of action. In objective increasingly
almost two decades following the first IMF program, challenging.
Pakistan participated in eight such programs, out of
In compliance with the
which seven were standby arrangements. The 8th
conditions, the policy
program, the first extended fund facility in 1980,
rate nearly doubled in
amounted to US$1.2 billion. In the subsequent two
2019, followed by a
decades, there were ten such programs, while in the last
significant depreciation
24 years, there have been five such engagements.
in the rupee; however,
the implications of Dr. Faisal Sultan Qadri
IMF and Pakistan: 1958-2024 these actions remained Research Economist Applied
Number of Programs Since 1958 Total Amount Agreed Under unnoticed due to the Economics Research Center,
Different Programs
pandemic, which led to University of Karachi
1 Standby 0.38 Standby
6 11.68 12.27 Arrangement
Arrangement
Extended Extended
Credit Facility
Infla on and Policy rate
Credit Facility
Extended Fund Extended Fund
Facility Facility 30
3 Structural Adjustment Structural Adjustment
13 2.32 Facility Commitment 25
Facility Commitment
20
Data Source: IMF official data related to the history of lending 15 Infla on
commitments as of 29 Feb 2020 10 Iterest rate
*Details of the last program finalized in 2023 are added to the available dataset
5
These programs were primarily intended to address the 0
short- and medium-term balance of payment issues. The
standby arrangement has been the predominant
program in terms of frequency and the agreed amount. Data Source: State Bank of Pakistan and Ministry of Finance
While engagements are waning in number, their effects
a substantial reduction in global and national interest
on the country's macroeconomic conditions are waxing
rates along with a sharp decline in international trade.
over time. In the last two programs, something different
When economic activities started to restore to the
was done that was not done in any previous programs.
pre COVID-19 levels, the policy and exchange rates
Most of the parameters laid down in the recent extended both started converging towards the IMF-targeted
fund facility (EFF) of July 2019 were largely implemented levels determined by the IMF and the foreign
rigorously, which has deep-rooted implications for short exchange markets, respectively.
and medium-term macroeconomic stability. These provi-
Consequently, inflation started to increase, primarily
sions included a sharp increase in the policy rate, an
driven by supply-side factors such as currency
adaptation of a market-based exchange rate regime, and
depreciation, higher borrowing costs, reduction in
amendments to the SBP Act (1956) to enhance the
subsidies, and increase in tax rates. In the meantime, the
central bank's autonomy in its functions and operations.
SBP Act (1956) was amended per IMF directives. The
While similar recommendations had been proposed in
situation documented in various monetary policy
the previous programs, the way these were implemented
statements implies that the rising energy prices have an
in the last two programs is unprecedented. As a result,
impact on CPI and it is impending the efforts to bring
Pakistan started a journey to achieve the established
inflation down.
targets in a way, that every step closer to the established

Focus Section
This becomes more challenging because of the necessity also being considered, including pension reforms,
to address inflation before considering monetary easing. privatization, downsizing, etc. However, none of these
Even though these policy documents present inflation as are likely to achieve the core objective of reducing the
affected mainly by supply-side factors, the same is fiscal deficit without addressing the most prominent
handled through demand management policies. The cause of this rising deficit. The following figure explains
same set of guidelines has severe implications for fiscal the real cause of these fiscal sufferings and some
stability, as presented in the following figure. profound implications.
The figure shows that all core components of total
Tax Revenues and Current Expenditures expenditures are declining in percentage terms, except
12000000 interest payments. The significant surge in current
10000000
spending can be attributed solely to the increase in
interest payments. That is why, besides rising federal tax
8000000
targets every year, the gap is widening even after FBR’s
6000000 remarkable achievements of collecting more taxes than
4000000 the set targets. These rising tax targets and
2000000 achievements, coupled with a reduction in current
subsidies, are pushing production costs and impeding
0
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
the decline in inflation. In contrast, without reducing
inflation, the policy rate will not reduce. As per a recent
Current Exp Tax Rev official statement from the Ministry of Finance, a 1
Data Source: Ministry of Finance percent rise in the policy rate raises the interest payments
by around Rs. 600 billion, which means that without a
Over the past five years, current expenditure has significant reduction in the policy rate, fiscal constraints
consistently represented approximately 85 percent of the are not expected to be relaxed.
total federal government expenditures, a figure that rose
Simultaneously, these policies hinder export
to 90 percent in the FY2022-23. That is why it is an
competitiveness and impede export growth, which is the
important indicator to be compared to federal tax
real solution to stable dollar inflows and reduction in the
revenues. Besides continuous increases in the Federal
balance of payment deficits, the core objective of all
government's tax revenues with increasing rates during
IMF-led reforms.
the past, the disparity between these revenues and
current expenditure has been expanding at an even With the new government having reached a staff-level
faster pace, which is widening the gap and compelling agreement with the IMF for the final review under the
the authorities to fill the gap through new debts mainly current Standby Arrangement and paving the way for
from domestic, commercial banks, given the restriction another three-year program, it becomes crucial to
imposed by the IMF program of 2019 prohibiting direct re-negotiate subsidy reductions, particularly in the
borrowing from the central bank. energy and gas sectors. Additionally, it is imperative to
urge State Bank of Pakistan (SBP) officials to account for
To reduce the rising fiscal deficit, along with securing
supply-side factors and consider reducing the policy rate
new loans, various expenditure-reducing measures are
to address the fiscal deficit,
production costs, and inflation and
promote export growth. Given the
Core components of current expenditures low foreign exchange reserves, it is
Percentage of total expenditure
40 vital to maintain import-restricting

35 policies until specific reserve targets
are met. Any agreement reached
30
Defence spending without addressing the real issues is
25 unlikely to achieve the goal of fiscal
20 Markup payments stability and avert a balance of
15 Current subsidies payments crisis.
10 Development expenditures About the Author: Dr. Faisal Sultan Qadri is
serving as Research Economist at Applied
5
Economics Research Center, University of
0 Karachi. He expresses his views on economic
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 and geo-political issues at various platforms
Data Source: Ministry of Finance including national television PTV News.

Focus Section
Fostering growth under IMF programme

During the period of the caretaker government, the
authorities have maintained economic stability through
strict adherence to the fiscal targets while protecting the
social safety net, maintaining a tight monetary policy
stance to control inflation, and continuing to build foreign
exchange reserves. And this has been done at the same time
as implementing timely adjustments in tariffs to shore up
the viability of the energy sector. The IMF stands ready to
hold a mission for the second review of the Stand-by shortly
after a new cabinet is formed. The focus, therefore, is
currently on completion of the current Stand-by program,
which ends in April 2024. We look forward to working with
the new government on policies to ensure macroeconomic
Huzaima Bukhari | Dr. Ikramul Haq | Abdul Rauf Shakoori
stability—Julie Kozack, Director Communications IMF
P
akistan’s economic scenario due to unabated The caretaker government deserves commendation for its
dependence on International Monetary Fund (IMF) proactive measures aimed at curbing unproductive
continues to be shrouded in risk and challenges. expenditures and augmenting both tax and non-tax
Fundamental problems have become permanent fixtures in revenue streams. Particularly, during the initial seven
our fiscal profile, making the path to recovery arduous and months of the fiscal year (July-January 2024), the Federal
lengthy. While there is a multitude of issues, the primary Board of Revenue (FBR) witnessed a substantial surge in tax
concern revolves around our inability to generate inflows collection, marking a 30% increase, reaching Rs. 5.15 trillion.
that match spending requirements, both internally and The Ministry of Finance attributes this noteworthy
globally. The economy is grappling with budget deficits and improvement to resurgence in economic activity and
current account deficits, which undermine indicators of enhanced profitability across various industrial sectors,
stability and progress. Under these circumstances, there is a including banking, oil and gas. This achievement
need to devise a long-term plan coupled with structural emphasizes the government’s commitment to fiscal
reforms to come out of debt prison. responsibility and economic revitalization, laying a solid
foundation for sustainable growth and development.
Once touted as an “agriculture-based”, Pakistan’s economic
trajectory purportedly shifted towards becoming an In line with their commitment to prudent fiscal management,
“industrial” one. However, amidst evolving dynamics and the caretaker government undertook several challenging, yet
our policymakers’ penchant for ad-hoc strategies, we find essential measures aimed at addressing entrenched issues in
ourselves regrettably transformed into a “Lender-Driven critical areas. They implemented unpopular measures such as
reducing subsidies in power and gas sectors through
Economy”. Our pivotal economic decisions hinge upon
quarterly tariff adjustments, demonstrating a resolve to
approvals from lenders, marking a significant departure
bolster financial sustainability and efficiency.
from our initial aspirations. Over the past few years, the
primary focus of our economic team has been to align with Furthermore, the government upheld stringent financial
policies outlined by the IMF leaving little to no room for discipline by refraining from issuing supplementary grants,
independent decision-making. Matters such as electricity signaling a dedication to fostering a culture of
and petroleum pricing, along with types of taxes to be accountability and transparency in fiscal affairs. Additionally,
imposed, are dictated by IMF agreements, constraining transfer of Public Sector Development Projects (PSDP) to
provincial Annual Development Programs signifies a
autonomy compelling the nation to navigate within the
decentralized approach to project management, facilitating
confines of externally dictated parameters, questioning its
more efficient resource allocation and project execution at
sovereignty and economic agility.
local level.

Focus Section
Adherence to financial discipline has yielded significant Within our multifaceted economic terrain, we observe a rich
fiscal gains, with the government achieving a primary tapestry encompassing agriculture, manufacturing,
surplus of Rs. 1.5 trillion during the period from July to services, and a burgeoning technology sector. Each of these
December 2023, translating to 1.4% of GDP, exceeding the sectors presents unique opportunities for growth and
IMF target of 0.5% of GDP, underscoring the government's development, necessitating bespoke solutions tailored to
commendable fiscal performance. The economy has also their individual characteristics and challenges.
shown signs of recovery, with GDP growth rebounding to
The agriculture sector, historically serving as the backbone
2.1% in the Q1 of FY24 after two consecutive quarters of
of our economy and employing a substantial portion of the
negative growth. This improvement is not only a positive
population, holds considerable sway over the nation's GDP
development but also indicative of a diverse recovery across
and overall economic performance. It remains imperative to
key sectors.
harness the full potential of this sector through targeted
Agriculture registered robust growth, recording a notable interventions and modernization efforts aimed at
expansion of 5.06%, while the manufacturing and industrial enhancing productivity and sustainability.
sectors have shown improvement of 2.48%. Additionally,
Similarly, the manufacturing sector, with its capacity for
the services sector exhibited resilience, posting a growth
value addition and job creation, plays a pivotal role in
rate of 0.82%. These encouraging indicators underscore the
driving industrial growth and export competitiveness.
effectiveness of governmental policies in revitalizing the
Moreover, the services sector, encompassing a diverse array
economy and fostering inclusive development across
of industries ranging from finance to tourism, is a significant
various sectors.
contributor to economic output and employment
Amidst a backdrop of anti-state propaganda from the generation.
opposition party Pakistan Tehreek-e-Insaf, which openly
Additionally, the technology sector, characterized by
urged the lending agency to intervene in Pakistan’s
innovation and entrepreneurship, holds promise for
domestic politics and demanded an audit of 30% of national
fostering economic dynamism and global competitiveness.
and provincial assembly seats before extending any
Leveraging the strength of each sector effectively while
financial assistance to the cash-strapped economy, the
addressing their respective constraints is essential for
recent statement from IMF carries a positive tone. It serves
realizing our nation's economic aspirations and promoting
as a reassuring affirmation of IMF’s readiness to collaborate
inclusive development.
with the newly elected government, despite the
contentious rhetoric and calls for interference in domestic However, the agricultural industry encounters various
affairs. This stance underlines IMF's commitment to obstacles, including high costs of essential inputs such as
constructive engagement and support for Pakistan's electricity, fuel, and fertilizers, as well as water scarcity and
economic development, irrespective of political discourse. outdated farming methods. But, through increased
collaboration of the public and private sectors and adoption
Despite some discernible signs of improvement, the overall
of modern mechanized agricultural techniques, we can
economic outlook remains fraught with challenges.
revitalize this sector to meet our national demands and
Sustained progress necessitates the continuation of timely
which holds the potential to spur higher levels of economic
decision-making, even if such decisions prove unpopular, to
activity thus reducing our reliance on imports.
ensure that the trajectory toward recovery remains
unimpeded. It is evident that the new government will seek Again, the manufacturing sector grapples with challenges
a comprehensive 24th IMF programme with increased such as high cost of operations, elevated interest rates,
financial allocation following the conclusion of the ongoing energy shortages, steep tariffs, infrastructural deficiencies,
US$3 billon Stand-By Arrangement (SBA). and bureaucratic impediments. Addressing these issues
warrants immediate attention from the government.
A paramount concern for the government should be the
Essential measures include investment in infrastructure, the
curtailment of fiscal deficit and reducing reliance on
development of human capital, and initiatives aimed at
borrowing. The substantial portion of fiscal resources
enhancing governance. By undertaking these efforts, we
allocated to debt servicing has precipitated a perilous cycle
can unlock the sector’s economic potential and pave the
of borrowing to meet fiscal requirements, exacerbating the
way for sustainable growth even under the austerity-driven
debt burden.
IMF’s plan and conditions to liberalize imports and remove
The task ahead for the newly elected political leadership is controls over forex market.
to sustain economic momentum in a manner that is both About the Authors: Huzaima Bukhari & Dr. Ikramul Haq, lawyers
sustainable and conducive to the preservation of and partners of Huzaima, Ikram & Ijaz, are Adjunct Faculty at
macroeconomic stability. This entails striking a delicate Lahore University of Management Sciences (LUMS), members
balance between fostering growth and managing fiscal Advisory Board and Visiting Senior Fellows of Pakistan Institute of
constraints, thereby safeguarding against any adverse strain Development Economics (PIDE). Abdul Rauf Shakoori is a
on key macroeconomic indicators. Maintaining this corporate lawyer based in the USA and an expert in ‘White Collar
Crimes and Sanctions Compliance’. They have coauthored a book,
equilibrium will be imperative for steering the economy
Pakistan Tackling FATF: Challenges and Solutions.
toward long-term resilience and prosperity.

Focus Section
Charting the Course to Self-Sufficiency:

Strategies Beyond IMF Dependency
E conomic growth signifies the enhancement of a
nation's potential GDP or output, marked by a rise in
average real income and an upliftment in living
Due to financial crises,
Pakistan sought first
time assistance from the
standards. It is quantitatively assessed through annual IMF in 1958. Pakistan is
increases in key indicators such as GDP, GNP, National grappling with a critical
Income, and national wealth (Mladen, 2015).
economic predicament
Pakistan and IMF due to its substantial
external debt. The
nation's capacity to
service this debt, propel
economic development,
Muhammad Ahmed, ACMA
Senior Execu ve,
and sidestep a default is A ock Petroleum Ltd and
critically dependent on Member, ICMA Research and
its income generated Publica ons Commi ee
from exports, remitt-
ances, and foreign direct investment. The sources of
Pakistan's debt can be categorized into four main
groups: private and commercial loans, multilateral
debt, debt owed to the Paris Club, and debt incurred
In recent years, numerous countries, particularly those from China.
within the developing world, have encountered severe
With the debt-to-GDP ratio surpassing the critical 77%
and prolonged economic and financial crises of varying
magnitudes. These downturns have ushered in new mark, that is alarming situation as it is 57.5% under law,
policy challenges and underscored the necessity for Pakistan's economic trajectory is heavily encumbered by
structural reforms, prompting assistance from its debt obligations, of which 60% is domestic and
international entities and countries. A significant portion accounts for 85% of interest payments.
of these nations has availed financial support from the
International Monetary Fund (IMF) and has undertaken According to the State Bank of Pakistan's debt report as
its recommended reform programs. The IMF has played a of December 2023, the total external debt and liabilities
pivotal role in supporting its member countries since the of Pakistan stand at US$131.159 billion. This includes IMF
early 1980s. However, there exists a subset of countries loans amounting to US$5.069 billion to the central bank
that have chosen to forego the IMF's reform agenda, and an additional US$2.527 billion to the federal
opting instead for domestic recovery strategies to government. Furthermore, the foreign exchange
navigate their economic and financial adversities liabilities have been reported at US$11.939 billion.
(Fujihara et al., 2017).

Focus Section
Challenges for Pakistan Although IMF programs have a mixed impact on

Pakistan's economy, incorporating both negative and
The Pakistani economy, which predominantly revolves positive, it is imperative for the country to seek
around the sectors of manufacturing and agriculture, has alternative avenues towards achieving self-sufficiency in
contended with numerous challenges including political its economic policies. Mitigating the adverse
instability, corruption, fiscal disarray, inadequate consequences of IMF engagements by strategically
government revenue, and inefficient resource utilization. enhancing export capabilities, boosting peace and order,
These issues have led to a persistent deficit in the prudent allocation of IMF financial support, and securing
balance of payments and a heavy reliance on external more favorable agreements, constitutes a critical
financing (Isran & Isran, 2014). When Pakistan sought pathway for Pakistan to reduce its dependency on the
assistance from the IMF and in exchange for financial aid, IMF. Emphasizing strategic negotiations and the wise
the IMF stipulated several conditions for Pakistan such as application of resources derived from IMF programs is
the enhancement of interest rates, reduction of essential for Pakistan to attain sustainable economic
subsidies, raise the energy prices and petroleum progress and self-reliance.
development levy and currency fluctuation were
mandated to stabilize the economy. Additionally, the Alternative Avenues Towards Achieving
government was required to streamline its expenditures Self-Sufficiency
and initiate the privatization of state-owned entities.
a) Structural reforms for Revenue Enhancement -
Currently, the Pakistani economy is experiencing a
Pakistan requires a robust fiscal management
period of stagflation due to all these challenges.
strategy to augment its revenue streams,
Outlook on Pakistan's Future achievable through a series of measures including
the expansion of the tax base, refinement of tax
Interestingly, the IMF recent long-term forecast has administration practices, eradication of tax
posited a notably optimistic projection of a five percent evasion, and curtailment of corruption.
growth rate for the year 2028 but Pakistan's economic Furthermore, optimizing subsidy allocations and
challenges are far from resolved. Looking beyond the minimizing non-developmental spending are
current tenure of the IMF program, the magnitude and essential steps to free up resources for pivotal
financing sources necessary to meet the country's sectors such as education, healthcare, and
significant external payment obligations remain a matter infrastructure development.
of concern. With an impending obligation to repay
US$77 billion in external debt by 2026, a formidable task b) Creating conducive Environment for Business -
for an economy with a GDP of approximately US$350 The government should enhance the business
billion, the path to 2028 presents a rigorous challenge. environment by simplifying regulatory frameworks,
Attaining the ambitious growth rate of five percent reducing bureaucratic complexities, and
necessitates unwavering political determination, safeguarding investor interests. The creation of
consistent policy reforms, and the introduction of special economic zones aimed at drawing foreign
innovative policies aimed at boosting productivity, direct investment (FDI) could stimulate innovation
enhancing revenue, and securing financing. It is and technology transfer. Offering incentives like tax
imperative for Pakistan to promptly transition its concessions, infrastructure improvements, and
economic and financial strategy from short-term access to skilled labor will also boost Pakistan's
mitigation to long-term resilience. appeal to investors.
c) Enhancing Exports through Diversification and
Positive Effects of IMF on Pakistan's Economy Market Expansion - The primary challenge lies not
• Provision of financial support to underpin the in identifying new products for export but in
stabilization of Pakistan's economic framework. optimizing and expanding the global market share
of Pakistan's existing strengths, notably in textiles,
• Provisional relief to manage the equilibrium of
agriculture, and technology sectors. To ascend from
external payment obligations.
being mere participants to leaders in the
• Implementation of fiscal discipline to avert international arena, Pakistan must concentrate on
macroeconomic discrepancies. elevating its export capabilities. This can be
• Enhancement of Pakistan's long-term economic achieved through a comprehensive strategy that
outlook through strategic initiatives. includes promoting branding and marketing efforts,
diversifying export offerings, enhancing product
• Increment in foreign direct investment inflows. quality, improving infrastructure, increasing
• Essential facilitation of trade activities for sustained competitiveness, and forging stronger trade ties
economic growth. through free trade agreements with partner nations.

Focus Section
Pakistan holds the capability to offer a wide array of SMEs and entrepreneurs' access to credit is
products for export, encompassing sectors such as essential for fostering entrepreneurship and
sports equipment, pharmaceuticals, textiles, generating employment
agriculture, leather, information technology, energy,
h) Reforming Institutions and Enhancing
and chemicals.
Governance - The efficiency and accountability of
By analyzing and emulating the success stories of institutions play a pivotal role in economic
nations such as India, Germany, Singapore, China, advancement. For Pakistan, prioritizing institutional
and Japan, Pakistan has the opportunity to venture reform, streamlining bureaucratic procedures, and
into untapped industries and carve a niche for itself reinforcing the rule of law are essential steps.
in the competitive global marketplace. Implementing transparent, meritocratic recruitment
systems, establishing vigorous anti-corruption
d) Investing in the Development of Human Capital -
protocols which is 2% of country’s GDP, and
Investing in human capital is key to economic
developing comprehensive regulatory frameworks
progress. Prioritizing education, skill development,
are critical for cultivating an investment-friendly
and bridging academia-industry gaps can enhance
climate. Additionally, decentralizing authority and
Pakistan's workforce efficiency and innovation.
granting increased fiscal independence to local
Additionally, empowering women in the workforce
governments are key strategies to improve service
is vital for economic growth.
provision and empower local communities.
e) Infrastructure - A Pillar of Economic Expansion -
i) Cultivate Innovation and Encourage Fresh
Investment in infrastructure is pivotal for economic
Concepts - For Pakistan to maintain its competitive
advancement. Pakistan should focus on enhancing
edge in the global marketplace, it is imperative to
its transportation, energy, and digital infrastructures
champion innovation. The government can
to boost productivity, attract investments, and lower
spearhead this effort by incentivizing research and
logistical expenses. Utilizing public-private
development activities and facilitating synergies
partnerships can mobilize extra resources and
among academia, the private sector, and research
expertise for these projects. Furthermore, the
bodies. Additionally, the establishment of
adoption of sustainable and climate-resilient
technology parks and incubators would significantly
infrastructure practices is essential for
bolster innovation and entrepreneurial ventures.
environmental sustainability and fostering green
Key sectors ripe for innovative breakthroughs
growth.
include agriculture, information technology,
f) Reforms in Agricultural Sector - Agriculture is a renewable energy, and sustainable transportation
cornerstone of Pakistan's economy, supporting a solutions, presenting lucrative opportunities for
large workforce and fueling exports. To elevate this national economic growth and development.
sector, strategic reforms aimed at enhancing
j) Adopt a Green Energy Strategy to Generate
productivity and increasing farmers' incomes are
Employment Opportunities - Pakistan possesses
essential. These reforms should focus on expanding
the potential to emerge as a frontrunner in
credit availability, adopting modern agricultural
renewable energy by encouraging the development
practices, upgrading irrigation infrastructure,
of solar, wind, and hydroelectric power projects. The
encouraging crop diversification, and boosting
expansion of the renewable energy sector can
investment in research and development.
catalyze job creation across multiple fields, including
Additionally, fortifying value chains and fostering
engineering, installation, and maintenance.
the growth of agro-processing industries can
Additionally, it can spur employment opportunities
significantly increase the value of agricultural
in associated sectors like smart grid technology,
outputs.
energy storage, and electric vehicles, while also
g) Reforms in Financial Sector - Reforming increasing the need for specialized expertise in areas
Pakistan's financial sector is crucial for its such as artificial intelligence, software development,
stability, efficiency, and inclusivity. Key actions and data analytics.
include reinforcing regulatory structures,
In Germany, the implementation of the
boosting corporate governance, and increasing
"Energiewende" policy has successfully generated
financial institutions' transparency and
over 300,000 employment opportunities within the
accountability. Further, broadening the reach of
renewable energy sector. Meanwhile, Denmark has
financial services, advancing microfinance, and
established itself as a global pioneer in wind power
growing the Islamic banking sector are vital for
technology, resulting in significant job creation
promoting financial inclusion and empowering
within the industry.
underserved populations. Moreover, improving

Focus Section
Concurrently, China has experienced a substantial lessons from the success stories of other nations.
boom in its solar industry, culminating in the Enhancing exports through product diversification,
creation of millions of jobs in recent years. quality enhancement, infrastructure development, and
targeted marketing and branding efforts, along with
k) Enhancing Pakistan's Economic Growth via forging stronger trade ties via free trade agreements,
Tourism Strategy - By capitalizing on its rich are crucial steps. Investments in human capital,
cultural and natural heritage, Pakistan has the infrastructure, agricultural modernization, financial
potential to significantly boost its economy sector overhaul, and institutional reforms are essential
through tourism. Key strategies include for achieving economic stability, fostering sustainable
infrastructure development, streamlining visa growth, reducing poverty, and elevating living
procedures, effective marketing, and providing standards. By prioritizing these reforms, Pakistan can
industry-specific training. Iconic sites like Lahore tap into its vast potential, attract foreign investment,
Fort, Badshahi Mosque, and Hunza Valley generate employment, and set the stage for a
underscore Pakistan's appeal. flourishing future. Moreover, combating corruption,
Learning from the tourism success stories of fostering innovation, and addressing income disparity
countries such as Spain, which saw tourism are imperative for Pakistan to maintain its competitive
contribute 12.3% to its GDP and create 2.6 edge globally.
million jobs in 2019, Pakistan can similarly Learning from the policies of countries like Norway,
benefit. The effectiveness of its tourism policy Uruguay, Rwanda, Bolivia, and Slovenia can offer
hinges on government dedication and valuable insights for Pakistan to refine its approach to
stakeholder collaboration. resolving its economic predicament. With strategic
l) Enhancing Pakistan's Economic Growth via planning and decisive action, Pakistan can effectively
Microfinance Initiatives - Implementing strategic manage its debt, avert financial default, and secure a
microfinance policies in Pakistan could enhance stable and prosperous outlook for its populace.
GDP growth by fostering financial inclusion,
stimulating entrepreneurship, boosting household
References
incomes, aiding small businesses, and fortifying the i) Mladen, M. I. (2015). Economic growth and development. Journal of
banking sector. Bangladesh's experience, where Process Management–New Technologies, International, 3(1), 55-62.
microfinance initiatives have facilitated small loans ii) Fujihara, N., Lark, M. E., Fujihara, Y., & Chung, K. C. (2017). The effect of
to economically disadvantaged individuals - economic downturn on the volume of surgical procedures: a
predominantly women - to establish small systematic review. International Journal of Surgery, 44, 56-63.
enterprises and elevate their standards of living, https://doi.org/10.1016/j.ijsu.2017.06.036.
serves as a compelling model. This approach has not iii) Available at: https://www.worldeconomics.com/Debt/Pakistan.aspx
only significantly contributed to GDP improvement
iv) https://www.brecorder.com/news/40294089/self-sufficiency-
but also set a precedent for similar policies across versus-loan-dependence.
South Asia and Africa. According to a World Bank
study, the proliferation of microfinance in v) https://profit.pakistantoday.com.pk/2024/02/12/state-bank-of-
Bangladesh has resulted in a 5-10% rise in per capita pakistan-reports-rise-in-national-debt/.
income and has played a crucial role in poverty vi) https://tribune.com.pk/story/2455088/debt-exceeds-legal-limit-by-
alleviation, benefiting millions. rs145tr.
m) Productive Negotiations with the IMF - Securing vii) https://www.statista.com/statistics/383729/gross-domestic-

product-gdp-growth-rate-in-pakistan.
favorable terms with the IMF by factoring in the risks
associated with natural disasters can lead to vii) https://www.business-standard.com/world-news/pak-needs-to-
agreements that better mitigate such vulnerabilities. pay-77-5-bn-in-debt-risk-of-default-real-us-think-tank-1230407008
39_1.html.
Furthermore, judicious utilization of the IMF
program to restore fiscal equilibrium is essential, viii) Isran, M. A., & Isran, S. (2014). Karachi: The Administrative Black Hole
emphasizing the prudent allocation of resources of Pakistan. Journal of South Asian Studies, 2(3), 217-226.
and effective reform execution. About the Author: Mr. Muhammad Ahmed is a Chartered
Management Accountant and an Associate Member of ICMA. He is
Conclusion currently working as a Senior Executive at Attock Petroleum Ltd. He
holds an LLB degree and is pursuing his PhD in banking and
In summary, Pakistan faces considerable challenges finance. Additionally, he is a member of the ICMA Research and
due to its substantial external debt and liabilities, which Publication (R&P) Committee.
threaten its economic stability. Yet, there are viable
strategies for overcoming these challenges by drawing

Focus Section
IMF and Taxation Reforms

T heinsufficient
fiscal challenges faced by Pakistan, including
tax revenue to meet debt servicing and
systems,
and
automation,
professional
defense needs, have prompted the government to training. Despite initial
initiate significant reforms in tax administration. The Tax challenges with IT
Administration Reforms Program (TARP), launched in system development,
2005 by the Federal Board of Revenue (FBR), aimed to the project progressed, Muhammad Ammad Ansari, ACMA
enhance revenue collection, broaden the tax base, leading to improved Incharge Taxa on,
strengthen audit and enforcement procedures, and performance, a U lity Stores Corpora on of Pakistan
ensure equitable and transparent application of tax laws. business-friendly
environment, and increased tax revenue collection.
Background and Initiation of TARP
The roots of TARP can be traced back to the appointment Achievements of TARP
of a Task Force on Reforming the Tax Administration by By December 2011, TARP had achieved its objectives,
the Government of Pakistan in June 2000. Following including the establishment of 57 Regional Tax Offices,
extensive discussions with stakeholders and input from Model Customs Collectorate, Taxpayers Education
the International Monetary Fund (IMF) mission in August Centers, and Transit accommodations. The successful
2001, the government approved a comprehensive tax completion of TARP, within the allocated budget,
reform strategy in November 2001. This strategy underscored the enhanced professional capabilities
encompassed policy, administrative, and organizational within FBR and paved the way for future project
reforms aimed at simplifying laws, promoting development objectives.
self-assessment, reducing exemptions, and enhancing
the effectiveness of FBR. Conclusion: Significance of TARP's Closure
Overall, TARP's closure marked a significant milestone in
Supplementing Skills and Financial Support Pakistan's tax administration reforms, signaling a move
To supplement the skills within FBR, the government towards professionalism, integrity, and responsiveness in
appointed professional members from the private tax collection, thereby reducing the cost of doing
sector in March-April 2002, focusing on human business and instilling confidence among taxpayers and
resource management, information management, tax collectors alike.
audit, facilitation, taxpayers' education, and fiscal
research. Additionally, the World Bank provided The Income Tax Ordinance of 2001:
financial support through the Project Preparation Challenges and Recommendations
Facility and the Public Sector Capacity Building The News on Sunday [Political Economy] reported on
Project, enabling the establishment of Large Taxpayer October 08, 2017, that in response to pressure from the
Units (LTUs), Medium Taxpayer Units (MTUs), and a International Monetary Fund (IMF), the General Pervez
Dispute Resolution Complex. Musharraf-Shaukat Aziz government introduced a new
Main Phase of TARP income tax law, thereby nullifying the long-standing
Income Tax Ordinance of 1979, which had been upheld
TARP's main phase, approved by the Executive and accepted for 22 years through judicial review until
Committee of the National Economic Council in February September 13, 2001.
2005, focused on enhancing FBR's capabilities through IT

Focus Section
This new legislation, titled the Income Tax Ordinance of authority. This authority should be staffed with specialists
2001, was hastily drafted by Lee Burns, an Australian in taxation and governance, rather than traditional
Assistant Professor, due to the urgency prompted by an bureaucrats. By centralizing tax administration under a
IMF Stand-By Arrangement. Regrettably, the drafting single entity, individuals and businesses would benefit
process was hurried, leaving typographical errors from streamlined processes and enhanced accountability
uncorrected and prompting concerns regarding the at the national, provincial, and local levels.
thoroughness of review and debate.
The modalities and operations of the proposed tax
Critics argue that the 2001 ordinance required numerous authority can be deliberated and finalized through the
revisions to function effectively and has remained CCI, as outlined in Article 153 of the constitution.
vulnerable to legal challenges. Despite this, successive Furthermore, the authority's oversight and
elected parliaments have failed to address its governance can be entrusted to the NEC, in
shortcomings, as highlighted by the Supreme Court in accordance with Article 156.
the case of CIT v Eli Lily (Pvt) Ltd (2009) (2).
Since 2002, this Ordinance has been amended over
2500 times, resulting in significant litigation and
revenue losses, as the law remains loaded with
contradictions and ambiguities.
The Supreme Court's observations in (2009) 100 Tax 81
(S.C. Pak) underscore the hurried nature of the drafting
process and the subsequent amendments, which have
further complicated the legal framework.
Despite these criticisms from the judiciary, there has
been little effort to revise the law comprehensively. The
lack of academic research and political will to address
these issues reflects a broader apathy towards the reform
of tax legislation in Pakistan.
In conclusion, the Income Tax Ordinance of 2001 stands
as a testament to the challenges of policy-making under
external pressure and the consequences of inadequate Guiding Principles for Tax Reforms
review and debate. Its continued flaws underscore the A key principle guiding these tax reforms should be
urgent need for comprehensive reform to ensure a fair alignment with broader economic policies aimed at
and effective tax regime in Pakistan. fostering sustainable economic growth. By allowing
market forces to operate freely and efficiently, the
Need for Comprehensive Tax Reforms
reforms seek to unlock the full potential of Pakistan's
in Pakistan economy. Moreover, the ultimate goal of taxation should
Pakistan has a significant opportunity to enhance its tax be to redistribute the benefits of economic growth
collections, which could potentially amount to equitably, thereby promoting social well-being and
approximately Rs. 12 trillion at both the national and cohesion.
provincial levels. To achieve this objective, the country In essence, the successful implementation of these
urgently needs to implement fundamental reforms, reforms would empower citizens to recognize the
which should be undertaken collectively under the tangible benefits of tax compliance. By promoting
umbrella of the Council of Common Interests (CCI) and transparency, fairness, and accountability in taxation,
the National Economic Council (NEC). Pakistan can create a more inclusive and prosperous
A critical component of these reforms involves the society for all its citizens.
establishment of a modern, professional, and fully
automated National Tax Authority. Such an authority
IMF Recommendations
would play a pivotal role in enhancing tax compliance and The International Monetary Fund (IMF) has been actively
effectiveness by leveraging advanced tax intelligence involved in providing extensive assistance to countries
systems to identify and address tax avoidance and evasion undertaking the introduction or restructuring of Value
practices. Added Taxes (VATs). Many nations, particularly those in
transition economies, have implemented VATs in recent
To ensure the success of these reforms, it is essential to
years, while others have reformed and simplified existing
foster consensus and engage in a democratic process to
VAT structures, especially in the Western Hemisphere.
enact legislation that establishes an autonomous tax

Focus Section
The IMF often relies on the experiences of

European Union (EU) countries as a reference
point when formulating recommendations.
IMF Recommendations on Value
Added Taxes (VATs)
In its recommendations, the IMF generally
advocates for VATs to have a single rate ranging
from 10 percent to 20 percent, with a zero-rate
applied to exports. The IMF emphasizes
minimizing exemptions to maintain the
simplicity and effectiveness of the tax system. In
cases where a single-rate VAT is not feasible, the
IMF suggests a dual-rate structure, comprising a normal
rate alongside a reduced rate for specific items. However, revenue erosion due to inflation and ensuring that
the IMF strongly opposes VATs with more than three rates import and domestic production are taxed equally.
and urges against taxing essential goods at low rates or IMF Recommendations on International
exempting them altogether.
Trade Taxes
Regarding the base of the VAT, the IMF recommends
The IMF discourages reliance on international trade
limiting exemptions to a few standard items that are
taxes, particularly export taxes, as they are often shifted
difficult to administer under a VAT, such as rental
back to producers and can distort trade. Instead, the IMF
incomes from housing, financial services, and the
recommends outward-oriented trade policies to
agricultural sector. The IMF suggests applying the VAT to
promote economic growth.
all other goods and services, including construction
materials, professional and personal services, and IMF Recommendations on Income and
government purchases. Corporate Taxes
In some transition economies, the IMF has Regarding income taxes, the IMF recommends reforms
recommended applying the VAT to farmers, considering such as reducing the graduation of marginal rate
the relatively large size and small number of farms schedules, broadening the tax base by limiting
compared to other countries. The IMF suggests taxing deductions and exemptions, and adopting a global
essential items at reduced rates rather than exempting income tax for equity goals. For corporate taxes, the IMF
them entirely. It also encourages adopting a advocates for a single, proportional rate, eliminating tax
consumption-type VAT to promote capital formation incentives, and ensuring uniform treatment of domestic
and maintaining international competitiveness by and foreign enterprises.
adopting a destination-based VAT.
In summary, the IMF's recommendations aim to create
The IMF recommends that the VAT cover the efficient, equitable, and transparent tax systems that
manufacturing stage initially and, in countries with strong support economic growth and development across
administrative capacities, extend to the retailing stage countries and regions.
eventually. The IMF advocates using the invoice-credit
method of accounting and setting a threshold level based References:
on turnover to exempt small traders from the VAT, thus (1) Undoing the legacy of military dictators, The News on Sunday
easing the administrative burden. [Political Economy], October 8, 2017: https://www.thenews.com.pk/t
ns/detail/564159-undoinglegacy-military-dictators.
The IMF recognizes that introducing a VAT requires
significant effort in educating taxpayers and training tax (2) CIT v Eli Lily (Pvt) Ltd (2009) 100 Tax 81 (S.C. Pak).
administrators. Therefore, it sometimes recommends About the Author: Muhammad Ammad Ansari brings over 17
reforming existing turnover or sales taxes before years of comprehensive expertise in tax operations and litigation
introducing the VAT, focusing on broadening the base within Pakistan. As a Chartered Management Accountant and
and simplifying the rate structure. Associate member of ICMA, he currently holds the position of
Incharge Taxation at the Utility Stores Corporation of Pakistan.
In addition to VAT recommendations, the IMF provides With a strong background in both direct and indirect taxation, he
advice on excise taxes, which are prevalent in most oversees operational functions and manages litigation matters.
countries. It suggests limiting excisable goods to Ansari's proficiency lies in navigating tax implications and
traditional items like tobacco products, alcoholic compliance requirements, while also optimizing tax strategies to
minimize liabilities for the Utility Stores Corporation.
beverages, and petroleum products. The IMF encourages
replacing specific rates with ad valorem rates to prevent

Focus Section
Navigating Pakistan's Economic Challenges:

From IMF Dependency to Strategic Solutions
W hyeconomic
does Pakistan need the IMF? What are Pakistan's
structural problems? What are the
How can this
be done?
continuous current account deficit problems? What are
their remedies? According to the WTO's
report for 2022, China's
The current balance of Pakistan's current account stands exports of goods and
as follows: services amounted to
Export in FY 2022 US$39.42 billion US$3.9 trillion, while
imports reached US$3.1
Remittances in FY2022 US$31.27 billion
trillion. In the same year,
US$70.69 billion China imported
Jalal Ahmad Khan, FCMA
Imports in FY 2022 US$82.28 billion US$261.4 billion worth Former Execu ve Director ICMA
of agricultural and
Deficit US$11.59 billion related products, as reported by Sander Trade.com and the
External Debt in FY 2022 US$131 billion USDA Foreign Agricultural Service. These imports included
items such as milk, poultry, soybeans, processed foods,
Pakistan's exports continue to be dominated by meat, grains, and vegetables. For further information on
manpower export, cotton textiles and apparel. Imports China's evolving demand in the agricultural import
include petroleum and petroleum products, chemicals, market, refer to the International Agricultural Trade Report
fertilizer, capital goods, industrial raw materials, and by Hui Jiang, dated September 29, 2020.
consumer products. Pakistan exports of goods and
services as percentage of GDP is 9.06% and imports of
goods and services as percentage of GDP is 17.99%
Major Imports
1) Machinery from China $16 billion
2) Fuel/Oil from UAE, Saudia, Qatar $17 billion
3) Edible Oil $4.5 billion
Total $37.5 billion
if this amount is paid under a Chinese Yaun Facility
Amount to be managed by Pakistan own resources
become US$82.28-37.5= US$44.78. In such a situation the Pakistan currently contributes 20% of China's agricultural
demand for Dollar will be less than its supply. Dollar imports, totaling approximately US$50 billion annually.
prices will decline to Rs.100 parity or even less. This will This substantial volume of imports necessitates a
reduce energy prices, reduce cost push inflation and well-organized arrangement.
make our industry more competitive.

Focus Section
The Zarai Taraqiati Bank Limited, also known as the In Pakistan, public savings deposited in banks are often
Agriculture Bank, has been experiencing continuous utilized for government consumption through various
losses over several years and is currently listed for instruments such as T-bills, leading to a shortage of funds
privatization. If 60% of its shares were acquired by available for lending to the private sector for
Chinese investors, they would likely make significant development purposes. This practice not only affects the
investments in Pakistan's agriculture sector, particularly government budget but also impacts other areas where
in the production of goods they intend to import. This the government has failed to deliver effectively.
could lead to a surge in the importation of Chinese Comparatively, during the 1970s, several countries,
agricultural machinery and the implementation of including Iran and present-day Bangladesh,
innovative methods to enhance yield per acre. However, experienced annual population growth rates
Pakistan's yield per hectare remains comparatively low in exceeding 2%. However, many of these countries,
comparison to other nations. including Iran and Bangladesh, have successfully
Rice yield per hectare (M. Tons) Wheat Yield per hectare (M. Tons) reduced their population growth rates over time. In
Pakistan 2.7 Pakistan 2.8 contrast, Pakistan and Egypt continue to face annual
Indian Punjab 4.3 Indian Punjab 6.5 population growth rates of around 2%. Additionally,
Bangladesh 4.3 China 6.5 public education, healthcare, and other social sectors
China 6.5 U.K 8.0
in Pakistan are not performing satisfactorily.
Philippine 6.0 USA 4.5
South Korea 5.2 World 4.8 These challenges highlight broader issues within
World 4.2 governance and policy implementation in Pakistan,
Source: Wikipedia indicating the need for comprehensive reforms
across various sectors to address socio-economic
Current Status of Internal Revenue concerns effectively.
Management in Pakistan Out of Box Solutions to some
• Domestic public debt stands at Rs. 25.8 trillion, which National Key Issues
is 45% of the GDP.
1) Pakistan Steel Mill
• Banking deposits amount to Rs. 26.11 trillion, with a
Instead of viewing a financially struggling entity as a
Profit After Tax of Rs. 307 billion, primarily sourced
burden, it should be seen as an economic opportunity.
from government bills.
The proposed way forward is as follows:
• The GDP for 2022 is US$353 billion, with a tax ratio of
The Government of Pakistan should consider offering
10.4%, amounting to Rs. 7.1 trillion.
the opportunity for an investor willing to establish a
• The GDP is Rs. 68.26 trillion, with a budget deficit of steel mill four times the size of the current one at Port
9.5%, equivalent to 6%. Qasim. In exchange, the land and location of the
• The shortfall in government revenue compared to existing steel mill should be included as part of the
expenditure is covered through various means, government's investment. A condition of this
including direct public borrowing via National Saving arrangement would be that only Pakistan's abundant
Schemes, bank borrowings utilizing various minerals would be utilized in the production process,
instruments, and partly through deficit financing. with no raw material imports allowed.
• Pakistan's GDP tax ratio stands at 10.4%, reflecting Potential investors, whether from Japan or China,
the inability to effectively tax various sectors such as would be required to construct their own power plant
agriculture, transport, wholesale retail, and other for the mill and invest in mining and railways
services. necessary for transportation.
• In comparison to Pakistan, several other countries The steel produced from this new facility would fulfill
have higher GDP tax ratios, such as Malaysia (13.6%), Pakistan's domestic steel requirements, with any excess
Azerbaijan (13.3%), Bhutan (13.6%), the Philippines production earmarked for export. Consumer prices for
(14.2%), Egypt (15.2%), Kazakhstan (16.4%), Morocco steel within Pakistan would be determined based on
(21.8%), and Turkey (24.9%). These figures are based variable costs plus overhead, excluding depreciation.
on data from the List of sovereign states by tax The government would impose a sufficient tax on
revenue to GDP ratio (2020) on Wikipedia domestically sold steel, while also extracting a portion of
The Economic formulae for economic development : profits from exported steel through a 35% charge on
export prices. Contracts with investors would span 50
National Income = Consumption + Saving (Investment) years, ensuring long-term stability and commitment.

Focus Section
a century later, scholars from Usmani University,

regardless of their religious affiliation, are renowned for
their teaching prowess in leading US universities.
Furthermore, South India has emerged as a hub for
information technology, with IT exports reaching
US$104 billion in 2022 (Statista IT Services).
However, in Sindh, Pakistan, haris (agricultural laborers)

are subjected to poor treatment, living in dire conditions
with limited access to education and healthcare
facilities. Despite significant increases in crop yields since
1947, the wealth generated has not translated into
improved conditions for the haris. It is imperative that
No employees would face termination; instead, they laborers, the backbone of agriculture, receive a fair share
could be transferred to any facilities owned by the of the wealth they help create.
investors, whether within or outside the country. To address this issue, a bill should be introduced and
To formalize this proposal, a bill should be introduced passed in the Provincial Assembly of Sindh, Pakistan,
and passed in the Senate of Pakistan. ensuring that haris are granted their rightful share in the
creation of wealth and are provided with essential
2) Pakistan International Airlines (PIA) amenities such as education and healthcare.
PIA has been facing consistent losses over several years, 4) Exploitation of Minerals, Oil & Gas
leading to a negative capital situation according to
balance sheet analysis. In contrast, Middle Eastern Russia's expertise in this area could greatly benefit
airlines have been thriving due to advantageous Pakistan and positively impact its balance of payments.
arrangements, including low fuel costs and joint However, the United States may not extend assistance
ventures with Western aircraft manufacturers. Pakistan unless Pakistan agrees to grant them military bases and
lacks its own fuel reserves and commercial aircraft control over its nuclear assets, reflecting an outdated
manufacturing capabilities, putting PIA at a competitive colonial mindset.
disadvantage against these Middle Eastern airlines. A potential solution lies in Pakistan's cotton production
Instead of a purely financial solution involving heavy capabilities. Bangladesh imports yarn from Pakistan and
loan write-offs and extensive staff layoffs, an economic exports garments to the US, amounting to US$45 billion
model could be considered. in 2022, according to Textile Today. If Pakistan were
granted the garment export quota to the US, it could
Under this model, PIA would become a subsidiary of Air effectively mitigate its balance of payment issues. This
China while retaining its identity. This arrangement strategic shift could potentially create a win-win
would not involve loan write-offs or significant layoffs. situation for both countries involved.
Fuel procurement would be conducted in Yuan through
a contract with the Chinese government, and all US In conclusion, it is evident that Pakistan is consuming
aircraft in PIA's fleet would be replaced with Chinese more than it produces, indicating a significant imbalance
models. This strategic partnership could benefit both in its economy. Furthermore, Pakistan's ability to
airlines involved. effectively address its challenges is hindered by weak
governance, lack of leadership sincerity, and a clear
Employees of PIA could be offered opportunities for sense of direction. Without concerted efforts to rectify
postings abroad within the broader Air China network. these underlying issues, improvement is unlikely to
To formalize this proposal, a bill should be introduced occur. Therefore, it is imperative for Pakistan to unite
and passed in the Senate of Pakistan. under sincere leadership and establish a clear direction
for progress if meaningful change is to be achieved.
3) Sindh Farmer Social Contract
Reference
In the waning days of the Turkish Khilafat in the previous
century, the Nawab of Hyderabad (India) married a – All figures related to Pakistan taken from State Bank of Pakistan
princess from the Usmani dynasty and established an About the Author: The writer is a Chartered Management Accountant
Usmani University in her honor. His vision was to and a Fellow member and the former Executive Director of ICMA. He is
promote excellence in education and facilitate the presently a faculty member at PAK-KIET University.
translation of knowledge into the local language. Today,

Focus Section
IMF and Energy Sector Reforms:

Case Study of Pakistan
T heFundExecutive Board of the International Monetary
(IMF) approved Pakistan’s 9-month Stand-By
IMF praises efforts
of Pakistan
Arrangement (SBA) on July 12, 2023, totaling
approximately US$3 billion at the time of approval. The
authorities to
program aimed to address various priorities, including stem rise in Hasnain Imam, ACMA
Senior Manager Research, Investment
advancing structural reforms, notably in the energy Circular Debt Banking Division, Bank AL Habib Limited
sector's viability, governance of State-Owned Enterprises
(SOEs), and enhancing climate resilience. In its First Review of IMF
under the Stand-by Arrangement (SBA), IMF has lauded
Recognizing the significance that the IMF places on the efforts of last caretaker government in the power and
tackling structural challenges in Pakistan’s energy sector, gas sectors to stem the rise in Circular Debt (CD), which,
we have provided a succinct overview of the IMF’s combined, reached 5.25% of GDP at end of FY23.
evaluation of the sector and the agreed-upon reforms
and future strategies between the Government of Factors that are presently contribu ng
Pakistan and the IMF to address these structural issues. to Pakistan’s power sector circular debt
Pakistan’s circular Debt Position, FY23 (July 2022 to June 2023)
Power sector Circular
Debt closed FY-2023
at Rs. 2.3 Trillion Poor
(2.7% of GDP)
Total energy sector enforcement
Drop in
circular debt closed ac ons
collec ons
FY-2023 at 4.4 Trillion due to large
Gas sector Circular (5.25% of GDP) Large DISCO price shock
Debt closed FY-2023 under- and high average
at Rs. 2.1 Trillion recoveries monthly
(2.5% of GDP Lower than- consump on
an cipated per household
Source: Pakistan, First IMF Review under the Stand-by Arrangement, January 2024
annual tariff
Pakistan’s power sector circular debt details, October 2023 rebasing
Jul 2022 to July 2022 to July 2023 to Source: Pakistan, First IMF Review under the Stand by Arrangement, January 2024
Circular debt details (Rs. Billion)
June 2023 October 2022 October 2023
Payable to power producers 1,434 1,617 1,750
GENCOs’ payable to fuel suppliers
Amount parked in Power Holding Private Limited
111
765
91
793
96
765
Addressing power sector CD: IMF has noted that
Total Circular Debt 2,310 2,501 2,611 Pakistan authorities notified the annual tariff rebasing in
Increase/(Decrease) in Circular Debt +57 +249 +301
Break-up of Increase/(Decrease) in Circular Debt late July 2023, as well as monthly and quarterly tariff
Budgeted but unreleased subsidies Nil 74 8
Unclaimed subsidies (70) (10) Nil increases thereafter. Despite this effort, power sector CD
Interest Charges 143 54 45
(Power Holding Ltd. + Independent Power Producers) reached Rs. 2.5 trillion at end-September 2023 (2.4% of
(Quarterly Tariff Adjustment + Fuel Charge Adjustment)
250 103 110
GDP), due to lower than-expected recoveries, driven in
Non-Payment by K-Electric (53)
160
65
61
43
77
part by a delay in the rebasing’s billing application.
236 163 165
Other adjustments (Prior year recovery)
Sub-total (a)
(447)
220
(254)
256
(147)
301
Addressing gas sector CD: IMF noted that Pakistan
Payment through fiscal space authorities increased natural gas tariffs first on November
Power Holdings Limited principal repayments (35) (7) Nil
Power Holdings Limited unpaid markup Nil Nil Nil 08, 2023 and subsequently effective February 01, 2024,
Stock payments (127) Nil Nil
Sub-total (b) (162) (7) Nil partly due to the fact that no gas tariff adjustments had
Total (a + b) 57 249 301
Source: Ministry of Energy (Power Division), Government of Pakistan
occurred between September 2020 and January 2023.

Focus Section
Restoring energy sector viability in Pakistan Accelerating medium-term cost-reducing reforms

IMF believes ‘’timely implementation of scheduled tariff i) Price rationalization to channel gas resources to the
adjustments and broader reform efforts’’ are critical to most efficient gas-based power generator (merit
restoring energy sector viability in Pakistan. In particular, order principle).
the Fund has recommended the following steps to
manage Pakistan’s energy sector circular debt: - ii) Clearing unguaranteed CPPA-G arrears subject to
renegotiating remaining power purchase agreements.
No Power Gas
avoid further fiscal pressures while ensuring electricity A

01
cted slab adjustments.
tariff structure must be maintained to shield the
vulnerable household consumers.
02 Complete .
September 2023 will complement tariff increases.
green energy. Reforms include:-
(i) Improving price signals for inputs;

(ii) Moving to private sector management of
Establishing a level playing field by: (i) E
DISCOs through long-term concessions
cross- ; and (ii)
03 from 2024;
Removing favorable power rates currently offered to
(iii)
well-connected industries.
power purchase agreements;
(iv) debt of Power
Holding (Private) Limited into cheaper
public debt;
(v) Expanding renewable energy capacity; and
(vi) Improving transmission efficiency.
04
Key priorities of Pakistan’s Circular Debt iii) Convert expensive Power Holding Private Limited
debt into cheaper public debt.
Management Plan, 2024
iv) Improve DISCOs’ performance by bringing private
Pakistan has informed the International Monetary Fund sector participation. Initially, this could take the shape
(IMF) that the following are the key priorities of Pakistan’s of long-term concessions arrangements and may
Power Sector Circular Debt Management Plan, 2024: - culminate into ultimate divestment or privatization.
Key priorities of
Pakistan’s Circular
Debt Management
Plan, 2024
2. Better 3. Accelerating
1. Ensuring cost-
medium-term
recovering targeting cost reducing
tariffs subsidies reforms
i) Government of
i) NEPRA will i) Strengthen Pakistan is taking i) Second phase i) Government is
continue with cooperation further steps in its (Implementatio considering
automatic between DISCOs, multi-year subsidy Date: FY-2026) will various options to
notifications of Ministry of Power, rationalization plan see the elimination replace agriculture
regular Quarterly and NEPRA. This that focuses on tube of one-third of tube well subsidies
Tariff Adjustments will allow smooth wells. The plan cross-subsidy for in Baluchistan.
and Fuel Charge petition and entail removal of tube wells.
Adjustments. determination government
processes. subsidies. These
subsidies benefit
large agricultural
users.

Focus Section
v) Institutionalize anti-theft procedures. IMF has rejected the ‘’new tariff rationalization
vi) Increase share of variable and cheaper renewable and circular debt management plan’’
energy in the generation mix;
IMF has rejected the ‘’new tariff rationalization and circular debt
vii) Refrain from netting out cross-arrears using management plan’’ claiming that ‘’the proposal does not address the
“non-cash” settlements underlying problems of Pakistan’s energy sector.’’
IMF Mission Chief Nathan Porter has said: “… it is essential for the
Addressing the rising Gas Sector government to focus on broad-based reforms, including to reduce
circular debt the high cost of energy, improve compliance and reduce theft and
line losses, end captive power, and fix the governance and
Pakistani authorities notified the IMF that the escalating management of the DISCOs, as well as keep up with regular tariff
circular debt in the gas sector is attributed to the adjustments. In our view, the proposed plan does not address the
following factors: underlying problems. In particular, the circular debt neutrality of the
tariff rationalisation plan is doubtful and it would place a significant
• Accumulation of Re-gasified Liquid Natural Gas additional burden on vulnerable households. The circular debt
(RLNG) tariff differential since FY19; ‘reduction plan’ entails fiscal risks given the chain of transactions
involved and would also continue the use of supplementary grants
• Non-implementation of regular end-user gas price which have placed a considerable burden on the fiscal accounts in
adjustments in line with semi-annual OGRA recent years.’’
determinations. What was the tariff rationalization and circular debt
To address gas sector circular debt, Government of Pakistan management plan?
has changed structural end-user gas tariff in February 2023. • It was proposed that power tariff for the industry be slashed
It has also raised gas prices first effective November 01, 2023 between Cents 8.5-11.75/kWh from Cents 14 per unit through
subsidy neutral proposal.
and subsequently in February 01, 2024.
• Protected categories of consumers be loaded Rs. 50/- to Rs. 450
Steps to be taken to address per month fixed charges to minimise cross subsidy.
Gas Sector circular debt • Energy sector circular debt stock of Rs. 1,268 billion be settled
using funding from Government of Pakistan.
• Implement the notification for OGRA’s scheduled
How was the scheme supposed to work?
semiannual gas price adjustment within the
mandated 40-day window. • Assume the Government passes a grant.
• The grant was planned to be given to twin Suis (SSGC and
• Reduce large preferential cross-subsidies across SNGP) who would then be able to adjust their receivables by
industrial and commercial users. transferring them to pay off to gas suppliers (E&P Companies).
• Disincentivize gas use in captive power plants. • Once the payments were to be received by suppliers, they
would be able to pay out dividends to their shareholders who
• Provide gas to power sector that is closer to happen to be predominantly Government of Pakistan.
cost-recovery.
(Source: Business Recorder, February 07, 2024, My research)
• Equalizing rates between export and
non-export industries. • The current government is dedicated to reducing
electricity costs.
• Implement structural gas pricing changes implied
by Weighted Average Cost of Gas (WACOG) Bill thus • The Prime Minister has initiated a review of the future
allowing full cost recovery of imported RLNG. of DISCOS, contemplating potential privatization.
• Implement cost reducing reforms (including • Dr. Musadik Malik clarified that DISCOS are not slated
measures to reduce Unaccounted for Gas (UFG) for provincial control.
losses. • The IMF dismissed the "tariff rationalization and
• Improve gas sector infrastructure, rehabilitate circular debt management plan" as a mere "book
networks, and control theft. adjustment."
Key takeaways from the interview of Dr. Musadik • On the prospect of providing industrial sectors with
Malik, Pakistan’s Minister for Energy electricity at Cents 9.0/kWh, Dr. Musadik Malik
expressed doubt, suggesting, "I doubt the IMF will
Minister for Energy, Dr. Musadik Masood Malik, provided approve of such a subsidy."
the following remarks during an interview with a local TV
About the Author: The writer is a Chartered Management Accountant
channel on March 14, 2024: and an Associate Member of ICMA. Currently, he holds the position of
• Pakistan's energy sector is facing an annual loss of Senior Manager Research in the Investment Banking Division at Bank
Rs. 1,000 Billion. AL Habib Limited. Previously, he served as the Head of Research at AL
Habib Capital Markets (Private) Limited. With over 18 years of
• The implementation of the Weighted Average Cost experience, he has been involved in equities and macroeconomic
of Gas is deemed necessary. research since 2005.

Focus Section
Managing Economic Challenges:

Breaking the Cycle of Dependence
P akistan's economic narrative has, for decades, been
interwoven with the International Monetary Fund
(IMF). Since joining the organization in 1947, the country
Beyond the Numbers:
The Underlying
Challenges
has been a frequent borrower, highlighting persistent The need for repeated
structural challenges that have hindered its quest for IMF bailouts often
Mohammed Naveed Jamal, ACMA
sustainable economic growth. This article delves into Finance Superintendent
reflects a multitude of
Pakistan's relationship with the IMF, comparing it to Packages Convertors Limited
underlying challenges
global trends in IMF loan utilization. It further explores (Part of Packages Limited)
that hinder a country's
the complex challenges inherent in this relationship and economic progress. In
proposes strategies for breaking the cycle of reliance on Pakistan's case, these challenges include:
IMF assistance, paving the way for long-term economic
• Chronic Deficit and Unsustainable Debt: Pakistan
independence.
has grappled with a persistent fiscal deficit for a
Pakistan's IMF History: A Standing Outlier significant period, leading to a high debt burden. This
deficit arises from various factors, including low
While many countries have utilized the IMF's assistance at tax-to-GDP ratios, inefficient public spending, and
different points in their economic journeys, Pakistan's reliance on borrowing for financing recurring
case stands out in the frequency and duration of its expenditures.
engagements with the organization. A year-on-year • Export Stagnation and Reliance on
analysis reveals a pattern of repeated recourse to IMF Low-Value-Added Goods: Pakistan's export profile
bailouts, suggesting a deeper struggle with fundamental remains heavily concentrated in low-value-added
economic issues that continue to impede self-sustained commodities like textiles and garments. This
growth. In stark contrast, many nations have used IMF dependence limits the country's ability to generate
programs as a temporary measure to navigate specific sufficient foreign exchange earnings, thereby
crises, subsequently transitioning to independent hindering its capacity to finance imports and manage
economic trajectories. external debt.
• Energy Sector Inefficiency and Circular Debt: The
Comparing Trends: Beyond the Numbers Pakistani power sector suffers from inefficiencies,
Understanding Pakistan's IMF history requires including high transmission and distribution losses,
considering the broader global landscape of IMF and a cycle of circular debt. This not only burdens the
economy but also discourages investments in critical
utilization. According to the IMF's own data, from 1945 to
infrastructure development.
2023, Pakistan has received 23 IMF loan programs,
ranking it among the top five most frequent borrowers. • Weak Governance and Institutional Issues:
Contrastingly, the majority of member countries have Challenges of corruption, weak regulatory
utilized the IMF only a handful of times, often as a environments, and a lack of transparency continue to
one-time measure during critical moments. This impede economic growth and development in
comparison signifies the unique relationship that Pakistan. These issues discourage foreign investment,
Pakistan has with the IMF, highlighting the country's hinder efficient resource allocation, and erode public
persistent economic vulnerabilities. trust in institutions.

Focus Section
These complex and interconnected challenges create a 1) Addressing the Fiscal Deficit:
situation where the country finds itself repeatedly turning • Broadening the Tax Base: Pakistan's low tax-to-GDP
to the IMF for support. However, relying solely on external ratio, hovering around 10%, is a significant
assistance does not provide a long-term solution. impediment to generating sustainable public
The IMF's Role and Conditionalities: revenue. Implementing tax reforms that broaden the
A Double-Edged Sword tax base, while ensuring fairness and minimizing
distortions, is crucial. This could involve measures like
The IMF provides temporary financial assistance to tackling tax evasion, introducing progressive taxation
member countries facing balance-of-payment problems. on high-income earners and luxury goods, and
Its programs typically focus on macroeconomic streamlining tax collection mechanisms.
stabilization through a set of conditions known as • Rationalizing Public Spending: A comprehensive
structural adjustments. These adjustments often involve review of public spending is essential to identify and
measures like fiscal consolidation (reducing the budget eliminate inefficiencies and wastage. This could
deficit), tax reforms, currency exchange rate adjustments, involve prioritizing essential public services,
and trade liberalization. restructuring subsidies, and implementing
performance-based budgeting practices.
While these measures aim to restore macroeconomic
stability and create an environment conducive to • Enhancing Institutional Capacity: Strengthening
long-term growth, they can also have negative institutions responsible for tax collection, public
short-term consequences. Austerity measures can lead to finance management, and auditing is critical to ensure
job losses, reduced public service provision, and transparency, accountability, and efficient resource
increased hardship for vulnerable populations. allocation.
Additionally, the IMF's emphasis on trade liberalization 2) Boosting Export Diversification:
can have negative impacts on domestic industries,
• Developing Export-Oriented Industries:
particularly in developing economies.
Encouraging and incentivizing the development of
Present Landscape: Negotiation Amidst high-value-added industries, such as information
Pressing Concerns technology, pharmaceuticals, and engineering, can
diversify Pakistan's export profile and increase
Pakistan's recent economic difficulties, exacerbated by foreign exchange earnings. This could involve
devastating floods in 2023, political instability, and global providing targeted investment incentives, improving
headwinds, have once again necessitated negotiations access to financing, and facilitating technology
with the IMF. The current negotiation process is focused transfer and skills development.
on measures to address the country's widening fiscal • Promoting Regional Trade: Leveraging regional
deficit, including revenue generation through tax trade agreements and fostering closer economic
reforms, tackling energy sector issues through reforms ties with neighboring countries can create new
and improved efficiency, and strengthening the social markets for Pakistani exports. Streamlining trade
safety net to mitigate the adverse effects of austerity procedures, reducing non-tariff barriers, and
measures on vulnerable populations. improving regional infrastructure connectivity are
However, concerns remain regarding the potential crucial steps in this regard.
impact of these reforms. Critics argue that the proposed • Focusing on Innovation and Entrepreneurship:
measures, including tax increases and subsidy cuts, will Fostering a culture of innovation and
disproportionately burden the poor and middle class, entrepreneurship is critical to developing new
potentially fueling social unrest. Additionally, the products and services with global competitiveness.
long-term efficacy of relying solely on external support This requires investments in research and
without addressing underlying structural issues remains development, promoting technology adoption, and
a point of debate. creating an enabling environment for startups and
small businesses.
Breaking the Cycle: A Path Towards
Long-Term Sustainability 3) Reforming the Energy Sector:
• Addressing Circular Debt: Implementing reforms to
To move beyond the recurring reliance on IMF address the pervasive issue of circular debt in the
bailouts, Pakistan needs a multi-pronged approach energy sector is crucial. This could involve measures
that addresses both immediate challenges and paves like improving efficiency in generation, transmission,
the way for long-term economic sustainability. Here and distribution, tackling electricity theft, and
are some key strategies: introducing cost-recovery mechanisms.

Focus Section
• Transitioning to
Renewable Energy:
Embracing renewable
energy sources, such as
solar and wind power, offers
a sustainable and cost-
effective solution to meet
Pakistan's energy needs.
Investing in renewable
energy infrastructure,
incentivizing private sector
participation, and phasing
out reliance on inefficient
fossil fuels are essential
steps in this transition.
• Regional Cooperation for Shared Growth:
• Improving Energy Conservation: Promoting Addressing common challenges like poverty,
energy efficiency through public awareness climate change, and energy security necessitates
campaigns, technology adoption, and collaborative efforts involving regional cooperation.
energy-efficient infrastructure development can This can provide a framework for sharing resources,
significantly reduce energy consumption and expertise, and best practices, fostering collective
improve energy security. prosperity and stability.
4) Strengthening Governance and Institutions: The Way Forward: A Collective Endeavor
• Combating Corruption: Tackling corruption is a Implementing these core strategies will undoubtedly
fundamental step towards creating an environment necessitate a collaborative effort involving the
conducive to economic growth and development. government, private sector, and civil society. The
This necessitates robust anti-corruption measures, government must exhibit strong political will and
including strengthening legal frameworks, dedication to enact these reforms. The private sector
promoting transparency and accountability in holds a pivotal role in actively investing in productive
public institutions, and empowering citizens to sectors, generating employment opportunities, and
report corruption. fostering innovation. Civil society can contribute by
holding the government accountable, advocating for
• Improving Regulatory Environment: Streamlining reforms, and promoting transparency and good
and simplifying regulations can reduce compliance governance.
burdens for businesses, encourage investment, and
Though the journey towards economic independence
foster innovation. This also involves ensuring
for Pakistan may be arduous and lengthy, it remains
regulatory clarity, predictability, and consistency.
achievable. By addressing its structural deficiencies,
• Investing in Human Capital: Investing in education prioritizing growth-centric policies, and promoting
and skill development is crucial to create a workforce good governance, Pakistan can liberate itself from
that can adapt to the demands of a changing global chronic economic reliance and forge a more resilient and
economy. This includes expanding access to quality prosperous future for its citizens. While the IMF may
education, improving vocational training programs, continue to play a role in the near term, the ultimate aim
and fostering lifelong learning opportunities. should be to strategically utilize any external aid and
transition towards self-sufficiency. This necessitates a
5) Fostering Regional Cooperation: sustained commitment to reform, good governance,
and comprehensive economic planning.
• Enhancing Trade and Investment: Building closer
About the Author: Mohammed Naveed Jamal is a Chartered
economic ties with South Asian neighbors can Management Accountant and an Associate member of ICMA. He
create new trade and investment opportunities for possesses over 13 years of experience in managing, analyzing, and
Pakistan. This requires active participation in financial reporting in the packaging and printing industry. He is
regional trade agreements, promoting currently working as Finance Superintendent at Packages Convertors
cross-border investment, and improving regional Limited (PCL), a part of Packages Limited and a listed FMCG company.
Prior to joining PCL, he worked as a Citibanker at the Fortune 500 Club
infrastructure connectivity.
Company, i.e., Citibank, N.A.

Focus Section
Exploring Alternatives to IMF Support:

Diversifying Economic Strategies
P akistan is a member of IMF since 1950. To date,
Pakistan has relied on 23 IMF relief programs1. IMF
unlike any other typical lending institutions does not act
Structural Reforms:
The country's economic
as a temporary bail-out institution. Unlike banks or any team should primarily
other financial Institutions, its policies do not tend to focus on attracting
focus on loaning for a defined maturity period and then foreign investments
through its SIFC (Special
Saeed Akhtar, FCMA
negotiating yet another loan at the end of that period.
Investment Facilitation Chief Execu ve Officer
The IMF’s insistence on long-term structural reforms and Council) platform. There Al-Saeed Consultancy Services
fiscal consolidation underscores that it is instead is a significant gap in
conditional upon hardwired structural and policy reforms infrastructure development, considering the young
to support macroeconomic stability and fiscal population of the country, which provides ample labor
consolidation. To date, Pakistan has not implemented force for development plans. Equally important is to
IMF reforms consistently due to political uncertainty, provide a hassle-free environment for investors by
changing political conditions and multiple other factors. adopting consistent economic policies. With over 9
million Overseas Pakistanis, they could serve as a
In the current circumstances although Pakistan has no significant source of FDI (Foreign Direct Investments) if
other option but to continue the existing IMF program, the current government's policies win their confidence.
However, many financial experts believe that Pakistan
should not seek a bailout package from IMF which is Furthermore, SIFC should expand its reach by engaging
beyond three years as a longer and larger program would major corporations globally and inviting them to make
be an economic disaster, potentially making Pakistan profitable investments. The government should also
another Argentina, which is stuck in a debt trap. collaborate with other countries, offering profitable
business opportunities on a shared basis, utilizing its labor
It is very important in the country’s interest, that the force as the primary bargaining offer for such projects.
newly elected Government not only successfully obtain a
medium range loan from IMF but also to form long term Taxation Inclusion/Documentation
plans to ensure that in future the economy of the country of Economy
is dependent more on internal factors rather than factors
Tax collection has consistently been a challenge for
which are beyond its control such as IMF, Aid and other
Pakistan's economy, leading to heavy reliance on IMF
such factors.
programs due to the government's inability to gather
A few of such reforms which in the opinion of author sufficient revenues domestically. The taxation system in
are critical for future growth and unwavering Pakistan necessitates significant involvement from
continuity of the county’s economy are explained in top-level government officials, and bold decisions must
the subsequent paragraphs. be made in this regard.
1
https://www.stimson.org/2022/pakistans-fatiguing-interest-in-the-imf-reform-program/
#:~:text=While%20Pakistan%20does%20not%20have%20any%20alternate%20short-term,
fiscal%20prudence%20and%20better%20management%20of%20state%20resources.

Focus Section
Firstly, a comprehensive technology-driven system for focus could include Information Technology,
should be implemented, accessible to the public, Freelancing Services, Agriculture, or others based on
displaying all inflows and outflows related to tax international demand. The economic team should
collections. This system should transparently show the collaborate with foreign investors, such as countries
total taxes received and their allocations, enhancing and large corporations, to propose and support the
taxpayers' understanding and confidence. development of these selected industries in Pakistan.
Secondly, an inclusive media campaign should be Ideally, Pakistan would emerge as a pioneering force in
initiated to encourage the general public to fulfill their these industries, with minimal or no direct competitors
tax obligations. This campaign should raise awareness operating at a national level.
about Pakistan's taxation system and highlight the Pakistan's strategic location and access to vast markets
personal and collective benefits of timely tax payments. should be leveraged to facilitate revenue growth within
Thirdly, the government should introduce emotional the country. Strong government support for selected
incentives to promote tax compliance. For instance, upon industries is crucial, as it can unlock the untapped
project completion, pictures of the highest taxpayers in potential of the nation and lead to increased revenue
the area could be displayed instead of those of ministers generation, reduced dependence on imports, and higher
or MNAs. Alternatively, inviting top taxpayers to tax collections. However, this approach carries the risk of
inaugurate projects could boost their confidence. The reducing demand for existing products or services.
government should also express gratitude to every Extensive research and careful consideration of
taxpayer who meets their obligations promptly. long-term impacts are necessary before initiating any
industry development endeavors.
Lastly, taxpayers should enjoy a higher social status
compared to non-taxpayers. While the current status of Export Boom
being a filer or non-filer exists, it has flaws. Firstly, anyone
can become a filer by filing a return, regardless of
whether taxes are paid. Secondly, the benefits received
by filers are limited, usually tied to investments like
property or cars. The filer status should be linked directly
to tax payments rather than return submission, granting
higher status, such as respect and privileges, in
government institutions and departments, surpassing
those of non-taxpayers.
These measures would not only enhance awareness
and transparency regarding the tax system but also
incentivize the general public to fulfill their tax Pakistan, with its diverse array of resources and
obligations. By fostering a culture of tax compliance, industries, finds itself at a critical crossroads where the
the country's reliance on IMF programs could be necessity for an export surge transcends mere economic
reduced significantly. strategy. Historically, Pakistan has grappled with
numerous trade imbalances, highlighting the urgency for
Nation-wide Industry Development an export boom to recalibrate this equation, thereby
Given the recent successes observed in other countries fostering a trade surplus that contributes to a more
through nationwide industry development initiatives, robust balance of payments.
the SIFC, along with the economic team, should While the country's exports have remained modest, there
prioritize the establishment of one or more industries exists untapped potential waiting to be harnessed.
to be developed on a national scale. Potential sectors Establishing an export commission with the primary
mandate of identifying global demands and matching
them with the country's production capabilities is
paramount. Through meticulous research, the
commission should select at least 5 to 10 industries,
ensuring a continuous assessment to maintain the
relevance and applicability of the opportunities and
strengths matrix.
An export-driven economic growth emerges as the
cornerstone in unlocking prosperity, mitigating trade
imbalances, bolstering foreign exchange reserves,
spurring job creation, promoting economic diversification,
and capitalizing on global market prospects.
Focus Section
As Pakistan embarks on its transformative journey,

integrating export-focused growth into its economic
framework emerges as a pivotal strategy to propel the
nation towards sustainable and resilient development.
Imports Policy Improvement
Currently, capacity payments to Independent

Power Producers (IPPs), established to address the
energy shortage, are adversely affecting the
balance of payments. It is imperative to review and
revise these agreements in line with the country's
future energy requirements.
Furthermore, the import of crude oil remains a major
contributor to foreign exchange depletion, perpetuating
Pakistan must reassess its import policy in light of trade imbalances. The government must facilitate a
persistent trade imbalances. While essential imports transition from reliance on crude oil to more
such as medicines should continue, measures should be cost-effective energy sources. Encouraging the use of
implemented to minimize spending on luxury items like electric vehicles is one such strategy, which not only
cars, possibly through increased taxes. addresses the issue of underutilized capacity payments
to IPPs but also reduces dependence on crude oil.
Additionally, special considerations should be given to
the import of machinery that could enhance the Additionally, the government should facilitate and
production of exportable goods in the formulation of promote the use of solar power batteries by making
the import policy. them available on installment plans for installation in
households and workplaces. This initiative not only
Development of Under Developed Area diminishes dependence on crude oil but also
The vast land and underdeveloped population within alleviates the burden of high electricity bills on the
the country present untapped potential that must be country's citizens.
maximized. The economic team should devise plans and
foster joint ventures with larger corporations by offering Conclusion
tax incentives in these underdeveloped areas.
Indeed, while the suggestions outlined above are
Energy Crisis aligned with the goals of national development, growth,
Pakistan has grappled with severe energy crises, which and reducing dependence on external financial
have significantly impacted its financial well-being. The assistance like IMF funds, it is crucial that policies
initial shortage of energy led certain producers and adopted by government officials remain consistent
exporters to relocate their operations abroad, regardless of political turbulence in the country.
consequently reducing the country's exports and Consistency in policies ensures stability and
production capacity. predictability for investors, businesses, and the general
public, fostering an environment conducive to
sustainable economic growth and development.
Regardless of changes in political leadership or
dynamics, maintaining a steadfast commitment to
sound economic policies is essential for long-term
prosperity and resilience against external shocks.
About the Author: Mr. Saeed Akhtar, a Fellow member of ICMA,
currently serves as the Principal and CEO of Al-Saeed Consultancy
Services, specializing in Business, Tax, Management, and Corporate
Consultancy. Prior to this role, he held the position of CEO at Falcon
Services (Private) Limited. Additionally, Mr. Akhtar has contributed as
a visiting faculty member at ICMAP, University of Lahore, and various
other organizations.

Focus Section
IMF — Not a Panacea but a Medicina

W ashington tells Islamabad to engage with the IMF
and implement economic reforms. A clear
message has been conveyed to the Pakistani
the approval of
Executive Board.
Borrowing money and
the
government, emphasizing the importance of

collaboration with the IMF for the necessary economic spending it on
reforms to achieve stability. Pakistan has been urged to unproductive endeavors
continue working with the IMF and other financial leads to a debt trap,
institutions to implement long-overdue macroeconomic where servicing the debt Syed Shamim Ahmed, FCMA
changes for the betterment of the country. It has also becomes impossible, Former General Manager Finance,
been emphasized that Americans are hesitant to invest; and yet more borrowing Karachi Port Trust (KPT)
they had planned investments of US$1.5 billion since is required to repay
2019 but could only invest US$250 million during 2022. previous loans. Pakistan
They seek a change in the business climate to make it finds itself in such a dire situation, with external advice
more favorable for investors. Pakistan still faces urging corrective action, yet we remain stubbornly
enormous challenges and direly needs to execute resistant to implementing necessary reforms to support
relentless structural improvements – which are at the top our economic stabilization efforts. This approach has
of their agenda. (Dawn 8th March 2024) become ingrained in our normal economic activities.
Once funds are received, required reforms are forgotten,
The above lines depict a grim narrative of our economy resulting in further requests for support.
and the management approach employed by our
economic leaders, who have seemingly adopted an It would not be accurate to say that the government is
ostrich-like strategy, allowing the economy to persist in not functioning as expected, or that institutions are not
perpetual crises. We have become overly reliant on the performing as required. Rather, it is fair to say that the
IMF as an administrative body, expecting not only bailout individuals in positions of responsibility are not working
packages but also guidance for our day-to-day economic diligently enough to keep the country afloat. Their
activities. This has led to a complacent attitude among insensitivity has led to a state of decline that is difficult to
our executives, merely waiting for the next IMF package, articulate but painfully evident. Our poor performance
with meetings becoming routine occurrences. across all sectors has placed us near the bottom of
international rankings.
The recent visit of an IMF staff mission to Pakistan from
March 15 to 18, 2024, to discuss the second and final We are not only accumulating debt but also inviting
review of the US$3 billion short-term bailout package, trouble because we are unwilling to change our ways.
followed the same predictable pattern. Pakistan made Despite claims by the government of increasing revenue
promises and assurances regarding macroeconomic collections, a rise in tax filers, and positive economic
stability, a gradual path to high economic growth, and indicators, the reality is starkly different.
commitment to meeting all structural benchmarks, quali- Increases in fuel, electricity, gas, and other utility prices,
tative performance criteria, and indicative targets for
along with soaring inflation reaching up to 38% (as of
successful completion of IMF reviews. Discussions
May 2023), have made life increasingly unbearable for the
revolved around familiar topics such as overall macroeco-
common citizen. There is a pressing need for significant
nomic indicators, government efforts on fiscal consolida-
tion, structural reforms, energy sector viability, and gover- improvements in governance to build resilience, for
nance of State-Owned Enterprises (SOEs)—a recurring which external counsel is also being sought.
cycle. Anyway, we expect the US$1.1 billion tranche after

Focus Section
Items 2018 2023 % changes Items 2018 2023 % changes
GDP US$ US$ (--) 5% US Dollar Rs.140 Rs.300 114%

357 B 339 B
Per Capita income US$ US$ (--) 13% Exports US $ 24 B US $ 32 B 33%
1700 1474
Growth Rate 6.2% 2% (--) 68% Imports US $ 55 B US $ 72 B 31%
Unemployment 5.8 % 6% 3% Foreign Debts US $ 95 B US $ 130 B 26%
Debt to GDP 64.8% 76.2% 18% Total Debts US $ 215 B US $ 267 B 24%
Infla on 10% 30% 200%
A comparison of our poor economy for the years 2018 and or increasing utility charges. However, it is ultimately up
2023 as given below is evident that instead of any to the countries to implement reforms, promote
improvement we sadly retarded even with IMF involvement. meritocracy and transparency, avoid nepotism, and
enhance tax collection.
With the bleak scenario described above, it's evident that
we are not heeding the advice of the IMF, which is A prime example of delayed reforms is the Federal Board
resulting in a downturn for the economy. While the IMF is of Revenue (FBR), which has been undergoing
not a miracle worker, its primary role is to advise restructuring since 2000 when a Task Force was appointed
struggling countries on how to alleviate poverty, for tax administration reform. Despite the initiation of the
promote trade, and achieve financial stability for Tax Administration Reform Program (TARP) in 2005 and
economic growth. When a country seeks a bailout the introduction of numerous reforms, actual
package, the IMF assesses economic weaknesses and improvements in tax collection remain uncertain, with
advises on capacity building, focusing on enhancing collections failing to keep pace with increasing
revenue generation through good governance and expenditures. The restructuring process of the FBR
institutional reforms. This is aimed at improving the continues at a sluggish pace, with bureaucratic hurdles
financial situation of the country and ensuring its ability posing significant impediments to implementation.
to repay debts.
In essence, the IMF acts as a rescuer for countries in
The IMF recommends general policies such as critical condition, providing essential support and
accelerating structural reforms to enhance climate prescribing guiding measures for recovery. However, the
resilience, strengthening overall governance, including success of these measures ultimately depends on the
that of state-owned enterprises, and improving the willingness of the countries to reform themselves,
business environment. In critical situations, it may also particularly in terms of governance practices.
advise specific measures like the withdrawal of subsidies
Countries Per Capita Debts 2023 % of GDP Per Capita Income

Income 2018 $ Trillion $ 2023 $
USA 64,800 32.9 122 81,400
UK 43,300 3.2 96 45,544
Japan 39,700 4.3 98 48,900
Netherland 53,000 4.0 381 63,300
Germany 48,000 2.8 65 52,800
Canada 46,550 2.7 127 53,250
Countries that could not show improvements with IMF loan packages:
Countries IMF Loans $ Billions Per Capita income Per Capita income
2023 2018 $ 2023 $
Argen na 46.0 11,000 13,603
Egypt 18.0 3,000 3,200
Ukraine 12.0 3,000 2,470
Pakistan 7.4 1,700 1,474
Columbia 5.0 6,800 6,660

Focus Section
Debts, in absolute terms, are neither inherently good nor Over the years, the IMF has extended assistance to
bad. It is their utilization that determines whether they Pakistan, preventing its economy from defaulting.
become a blessing or a curse. Unfortunately, for us, debts However, the sustainability of such arrangements remains
have largely been a curse, as they are often used to cover uncertain. Despite receiving significant financial support
budget deficits rather than being invested in productive from the IMF and other lenders, Pakistan still struggles to
endeavors where the returns could bring relief. find a way forward due to a lack of will, sincerity, and
determination among those in positions of authority.
It is commonly believed that the borrower appreciates
the value of money the most through its usage. Currently, Pakistan finds itself at a critical juncture, where the
Countries progressed in spite of high debt. decisions made will determine its fate. The failure to heed
the positive economic advice from the IMF has brought the
The above comparison between two sets of countries country to the brink of collapse. While directives for
serves as an eye-opener. One set of countries learns from economic reforms have been issued repeatedly, they have
their mistakes, implements reforms, and steadily not been implemented earnestly, resulting in a stagnation
improves. Their GDP consistently grows over the years, rather than progress. Political challenges have further
reflecting their development. On the other hand, the exacerbated the economic downturn, compounding the
second set of countries merely use loans as a lifeline existing issues faced by the country.
without embracing any reforms, remaining trapped in a
vicious cycle of stagnation. They persist stubbornly, Way Forward
refusing to learn from their errors.
The IMF provides broad outlines and specific measures
The IMF, however, does not possess a magical solution to in some cases, leaving it up to the government to work
propel a country forward. It can provide guidance and out the details and achieve the desired outcomes.
support, but ultimately, it is up to the country's leadership However, it is often the common people who bear the
to chart a course of action towards progress and brunt of government actions, such as raising taxes and
overcome financial setbacks. This includes addressing increasing prices of essential utilities, particularly in the
issues such as stagnant GDP growth, low employment face of high inflation and unemployment.
rates, inadequate healthcare and education facilities,
Two cancerous evils plague our society and economy.
widening trade deficits, high inflation, and mounting
First, nepotism, which is a criminal offense, has infiltrated
debts. Such circumstances require decisive actions.
our government machinery, resulting in appointments
Even though the IMF conveys its advice using soft based on personal connections rather than merit.
language and adhering to protocols, its Similarly, contract appointments or post-retirement
recommendations carry weight due to its high appointments with exorbitant salaries further
reputation worldwide. However, the country is often left exacerbate the issue. Without sincere implementation
to proceed at its own pace, which may be slow. It is by competent individuals, reforms cannot succeed—it is
crucial for countries to heed the advice provided by the the human element behind the reforms that ultimately
IMF and take necessary actions to address their determines their effectiveness.
economic challenges effectively. Secondly, delays in decision-making, often driven by
Unfortunately, Pakistan has shown a reluctance to corruption, have led to cost overruns and inefficiencies
earnestly embrace the guidelines proposed for its in public sector projects. Major projects, such as the
improvement, as evidenced by the observations of the Diamer-Bhasha Dam, have experienced significant
Country Director of the World Bank in December 2023. delays and cost increases, placing a heavy burden on
The Director highlighted the urgent need for policy taxpayers. It is crucial to remember that "time is money,"
changes to address development issues that have only and such delays only serve to exacerbate financial strain.
benefited a select few and resulted in volatile and In summary, Pakistan has failed to derive full benefits
stagnant growth. Pakistan's current economic model has from IMF support and continues to be classified among
fallen behind its peers, leading to a reversal in poverty poor countries, with a poverty rate of 39.4% in 2023—a
reduction efforts. The country is facing sharply increased significant increase from 21.9% in 2018—and a meager
inflation and significant depletion of internal and external per capita income of US$1474.
buffers, which have hindered economic progress.
About the Author: The writer is a senior Chartered Management
While some steps taken by the government have been Accountant having Fellow membership of ICMA. He retired as General
acknowledged, tangible results are yet to be seen. It is Manager Finance from the Karachi Port Trust (KPT) where he served
imperative for Pakistan to heed the advice of for around 22 years in different positions. He was also a member of the
international organizations and implement necessary Karachi Dock Labour Board for 7 years. After doing his MBA from IBA
Karachi, he started his initial career with Citibank and then served in
reforms to address its economic challenges effectively. Awami Autos (now Pak Suzuki).

Focus Section
Pakistan and IMF Trignometery

Global Spectrum • C – Clutches of
In deficient economies, external financing is often seen as Utilities /
a blessing in disguise in the short term to manage trade Commodities
collapses and forex settlements. The situation is being Financings.
tightly controlled amidst hyper-economic pulses, which • K – Knowledge
are compounded by inward trade imbalances and limited Divulgence / Khizar Hayat, FCA
outward realizations. Knighticks Deputy Manager Finance
According to an international survey (Global Risks Emergent Plans. A ock Refinery Limited
Perception-2023) on vital global challenges, the leading • E – External Over
concerns for the future include (1) Energy Supply Crisis, reliquaries / reliances
(2) Cost of Living Crisis, (3) Food Shortages, and (4) Debt • S – Surplus Foreign Trades Forecast Defecincies.
Burdens. These issues are classified into broader
categories of: Pull Push Factors - Crossborder & Inverse
1) Societal Impacts While capital markets primarily serve as secondary
sources for accruing gains, they also play a significant role
2) Economic Impacts as the primary avenue for capital injections, with the
The debt crisis serves as a central catalyst for both exception of fresh issues. They exert considerable
societal and economic disruptions, despite being influence on inflationary trends and trade trajectories,
positioned in the middle of the axis. It acts as a trigger for particularly in hyper-economies, where lending practices
various risk scenarios that need to be carefully planned can lead to:
and addressed by the appropriate stakeholders. • Artificial bubbles in money-market operations.
Alongside the ominous echoes of ongoing world wars, • Tying up capital for extended periods until revival.
the debt crisis has infiltrated the very foundations of the
micro-economies of developing countries. • Necessitating marginal gains amidst
monetary pressures.
Bottle
• Influencing perceptions and trends of cyclical
• B: Balancing Bullish/Bearish tendencies implicitly economic pulses
with federal robustness should be managed through
insider segmentation. Here's a breakdown of the relevant economic values in
terms of debt to GDP, with a comparison to 2005:
• O: Orbit flows should be excluded from external
sources. • In 2008, the debt to GDP ratio was reported at 63%.
• T: Terms segregations could be alternative sourcing • By 2013, this ratio had increased to 73%.
trajectories for ameliorations. • In 2018, it further rose to 78%.
• T: Territorial mutualizations should also be • Subsequently, in the following two and a half years,
considered to mitigate debt pile-ups. instances have been observed where the debt has
• L: Lubrication terms for extended tenures with surpassed the national GDP by over 22%.
shorter paybacks could ease the burden. This trend indicates a notable increase in debt relative to
• E: Exploring and furthering less contributory aven- the GDP over the years, signaling potential challenges in
ues could provide additional suppor managing fiscal stability and debt sustainability.
Neckes While excessive talkativeness may not directly solve
• N – Nosles of Micro – outlays. economic challenges, thoughtful deliberations can
• E – Exorbitant Flows with operations of indeed foster a more positive outlook and potentially
related entities. lead to optimistic changes.

Focus Section
However, it's crucial to ground these discussions in Loan funds should undergo revitalization to revamp:
reality, acknowledging facts and historical instances. For
example, one historical milestone in Pakistan's economic • Freeing flows to transform into cash-rich earners.
history is the instance of zero external debts. • Exploring untapped avenues for strategic planning.
Regarding government debt in South Asia, it's notable • Discarding stagnant or detrimental layouts.
that in 2022, it averaged 86% of GDP. Such high levels of
debt pose significant risks, including the potential for • Addressing inflated streams to promote stability.
defaults, increased borrowing costs, and the diversion of
credit away from the private sector. These challenges Domestic Markets Dynasities
underscore the importance of prudent fiscal Diversifying lending forms to support domestic market
management and strategic planning to ensure
dynasties and project-based financing instead of
sustainable economic growth and stability.
countrywide lending, we can focus on:
Way Forward
• Money market support.
Sourcing / Fundings Ovaltines
• Central treasury management.
Consumers Spending Mix : Developing economies are
often characterized by an abundance of: • Funding public projects (capital and maintenance).
• Spending on fast-moving consumer goods (FMCG) • Refinancing existing loans.
driven by consumer trends.
• Facilitating foreign trade settlements.
• Non-development outlays.
• Providing utilities and energy provisions for public
• Excessive maintenance costs.
sectors.
• Dilution of product qualities.
Terms of arrangements should be reassessed in
• Dependence on international trade. accordance with relevant rollovers and anticipated
• Technological limitations or 'technology backyards.' inflows. Countrywide lending has led to overloaded
• Expensive and often inefficient systems or burdens and crunches on national exchequers. The dire
'systems emporium need is for:
Foreign Institutions - Local PE + IMF • Scaling lending.

The extent of availability of settlement currencies in • Specifying lending with rollovers.
home countries is a prime consideration for robust
growth, alongside exploring alternative options. The • Allocating lending for projects with matching inflows.
need of the hour is to expand the geographic distribution • Extending lending to public entities.
and spread of:
• Equitable presence of lending funds across multiple Realms & Pictorials
jurisdictions. Public monetary fundings traditionally lie in ambiance
• Establishment of local private equity (PE) branches of with respect to the realms of their disposal, coupled with
foreign institutions and the IMF. requisite media projections
• Flexibility and availability of lending in multiple Country Inward Trades Management
currencies.
Forex Trades Settlements - To ease the processes of
• Diversity in settlement modes.
transactional flows arising from international trades,
• Equity in funding sourcing for public, private, and various measures can be devised, including:
institutional domains.
• Involving dedicated multinational corporations in
Compliance Functions arrangements for routing international commerce
– Centralization (Corps) and imports.
In pursuit of effective excellence, traditional compliance
• Facilitating settlements among foreign holdings
operating modes should be assimilated into:
located outside the country (referred to as foreign
• Centralized and enhanced access protocols. settlements).
• Oversight mechanisms within corporate domains. • Simplifying local currency conversion procedures.
• Ensuring trustworthy compliance with
• Exploring the concept of currency bordering
acceptable outputs.
Focus Section
Specialized Entities - For commercial vendings The aforementioned challenges associated with borrowings
originating from abroad, managing the repercussions or debts, whether external or internal, exacerbate the
may involve active planning and state support for: struggling economic outlook of developing countries,
particularly those burdened with debt.
• Entities solely engaged in commercial importing,
with a focus on minimizing direct imports. In contrast, philanthropic social entities such as
Alkhidmat and Akhuwat have emerged as beacons of
• Entrusting Special Purpose Vehicles with sectoral national excellence. Their growth and contributions can
demarcations for international trade layouts. be attributed to the following factors:
Stuck-up capital is another important consideration in • Providing loans for micro-enterprises with
arranging international bargains and trade deals. repayment covenants limited to the principal
amount.
Collection & National Treasury Redirections
• Offering loans at zero coupon rates, without any
Tax Free Status interest.
To truly transform local industrial frameworks, the • Achieving near-full recovery of social support
existing traditional tax structure should be made (approximately 99.9%).
supplementary rather than detrimental to business
growth. Steps forward could include: • Sustained growth of portfolios, trending upwards.
• Mitigating risks through active stakeholder
• Implementing contributory or profit-sharing
engagement and participation.
arrangements rather than imposing compulsory levies.
• Abundance of social voluntary contributions and
• Extending tax-free nets to encourage investment
successful execution of participatory initiatives,
and expansion.
leading to societal upliftment."
• Granting free entity status to businesses after
fulfilling requisite national contributions.
Policies Revitalizers
Policies aimed at revitalizing equitable taxation,
• Promoting the proliferation of new business hubs
simplifying consumption taxes, optimizing bond usage,
through widespread geographic distribution.
and implementing effective tax sizing would lead to:
Rising Interest Rates • Lower real income levels.
Rising interest rates are exacerbating debt risks for the • Reduced risk of distress caused by rising debt levels.
poorest countries. Approximately 60% of countries
eligible to borrow from the World Bank's fund for the
poorest are either in debt distress or already
experiencing it. The implications of rising interest rates
are manifold:
• Increased borrowing costs, leading to strain on cash
flows.
• Stalling business growth due to higher financing
expenses.
• Heightened volatility in financial markets, affecting
investor confidence.
• Contraction in inward international trade volumes.
• Diminished long-term benefits of borrowing for
capital stewardship.
• Governments may resort to measures such as
tightening international input channels. About the Author: The writer is currently associated with the Attock
Refinery Limited [Attock Group] as Deputy Manager Finance and
• Decreased borrowing and investment activities. looking after the areas of Treasury Bills and Associates (Related
Parties) for the last eleven year. He is a Fellow member of the Institute
• Enhanced financial constraints and restrictions of Chartered Accountants of Pakistan.

Focus Section
Navigating the Winds of Change: A Strategic

Guide Amidst IMF-Supported Reforms
I nofthechange
tumultuous seas of global economics, the winds
often blow with the force of IMF-supported
reforms, leaving organizations worldwide to navigate
uncertain waters. These reforms, characterized by
stringent fiscal measures and structural adjustments,
pose a significant challenge for businesses across
borders. However, they also present a unique
opportunity for strategic adaptation and transformative
growth. This comprehensive exploration seeks to unravel
the intricate dynamics of psychological and
organizational impacts engendered by IMF-supported
reforms. Drawing upon insights from seasoned HR Rukhshinda Mehar Dr. Saqlain Sher
professionals across various countries, including
Pakistan, India, Brazil, and Nigeria, this article offers a
roadmap for HR practitioners to not only weather the environments on employee well-being and
storm but to emerge stronger and more resilient in the organizational effectiveness, particularly amid periods of
face of economic upheaval. upheaval. These scholarly insights underscore the
strategic significance of HR's orchestration in crafting a
Strategic Insights and Global Perspectives: cohesive response to the challenges presented by
Navigating IMF-Supported Reforms IMF-supported reforms, aligning with the overarching
In framing the discourse on navigating IMF-supported theme of this guide.
reforms, it is vital to embed the discussion within the rich
Expanding the discourse to incorporate global
tapestry of organizational change management literature.
perspectives, research from diverse contexts such as
Extensive research underscores the critical role of effective
India, Brazil, and Nigeria offer invaluable insights into the
communication, proactive employee well-being
multifaceted strategies employed by organizations to
initiatives, and strategic leadership in facilitating
navigate economic reforms. For instance, studies by
successful organizational transitions. Scholars such as
Gupta and Sharma shed light on the efficacy of
Kotter and Lewin advocate for clear communication and
leadership development programs in fostering
vision alignment during periods of change, citing their
organizational agility and innovation amidst economic
instrumental role in mitigating resistance and fostering
uncertainty in India. Similarly, research by Silva and
employee engagement. Similarly, insights from Prosci and
Oliveira elucidates the pivotal role of employee
Bridges emphasize the necessity of addressing the
participation and engagement initiatives in driving
psychological dimensions of change, advocating for the
organizational resilience in Brazil. These findings
establishment of supportive structures and resources to
underscore the universality of the challenges posed by
effectively navigate uncertainty.
economic reforms and underscore the importance of
Moreover, an in-depth exploration of the literature context-driven strategies tailored to the unique needs of
reveals a burgeoning focus on the strategic imperative of each organization, aligning seamlessly with the strategic
HR professionals in bolstering organizational resilience framework outlined in this comprehensive guide.
amidst economic reforms. Studies by Cameron and
Quinn accentuate HR's pivotal role in shaping
Methodology
organizational culture, promoting values of adaptability, To glean strategic insights into navigating
and fostering continuous learning to enhance resilience. IMF-supported reforms, a qualitative approach was
Furthermore, research by Dutton and Heaphy employed through in-depth interviews with 20 heads of
underscores the transformative impact of positive work HR from various sectors in Karachi, Pakistan.

Focus Section
Each participant possessed a minimum of 15 years of communication, meticulously crafting messages that
experience, ensuring a depth of knowledge and elucidate the rationale, objectives, and implications of
perspective on organizational dynamics amidst reforms. By utilizing a variety of channels, from town hall
economic reforms. The interviews were conducted using meetings to targeted newsletters, HR can ensure a
a semi-structured format, allowing for flexibility while cohesive narrative that guides employees through the
ensuring consistency in exploring key themes such as turbulent waters of change.
strategic communication, employee well-being, and Navigating the Murkiness with Strategic HR Approaches
leadership development. Through rigorous analysis and
thematic coding, patterns and insights emerged, guiding Proactive Well-Being Amidst Uncertainty
the formulation of strategic recommendations Uncertainty breeds anxiety and apprehension among
presented in this comprehensive guide. While the employees, regardless of geographical location. To
sample size is focused on a specific geographic region, navigate this murkiness, HR professionals must adopt
the findings are enriched by drawing parallels with proactive approaches to employee well-being.
global experiences and insights, offering a robust Establishing confidential feedback channels, offering
framework for HR professionals navigating similar mental health resources, and facilitating regular
challenges worldwide. one-on-one sessions are crucial strategies identified by
Bridging Theory to Practice: Contextualizing surveyed HR leaders. Whether in Karachi or São Paulo,
Strategic Insights Mumbai or Lagos, providing employees with avenues to
voice concerns, seek clarification, and receive
After laying the methodological groundwork, the constructive feedback fosters a culture of trust and
transition to exploring the practical implications of resilience within the organization.
navigating IMF-supported reforms is essential. This
bridge between theory and practice serves as a critical Strategies for Organizational Aegis
juncture in the discourse, where scholarly insights Fortifying Resilience and Flexibility
converge with real-world challenges faced by
In the face of economic turbulence, organizational
organizations. By contextualizing strategic insights
resilience emerges as a strategic imperative worldwide.
within the broader theoretical framework of
HR must spearhead comprehensive training initiatives
organizational change management, HR professionals
that transcend traditional skill sets, encompassing
can glean actionable guidance to navigate the
emotional intelligence, adaptability, and change
complexities of economic reform.
management. As underscored by survey findings, a
As organizations grapple with the multifaceted impacts staggering 90% of HR leaders advocate for a continuous
of IMF-supported reforms, understanding the learning culture that equips employees with the tools to
psychological effects on employees becomes navigate uncertainty and embrace change. Whether in
paramount. Deciphering the intricacies of change Karachi or Mumbai, São Paulo or Lagos, fostering a
psychology is not merely an academic exercise but a growth mindset and promoting ongoing skill
practical necessity for HR practitioners tasked with development lays the foundation for organizational
guiding organizations through periods of uncertainty. By agility and resilience.
elucidating the strategic significance of effective
Alchemy of a Positive Work Environment
communication, proactive well-being initiatives, and
adaptive leadership, this transition sets the stage for a A positive work environment is a universal need,
deeper exploration of the practical strategies outlined in transcending geographical boundaries. Recognition
subsequent sections. programs, internal storytelling platforms, and
stress-alleviating interventions serve as catalysts for
Decoding the Psyche: Unraveling the fostering a culture of positivity and resilience. Whether in
Psychological Effects Karachi or Mumbai, São Paulo or Lagos, celebrating
Strategic Communication as the Cornerstone successes, sharing stories of perseverance, and
prioritizing employee well-being cultivates an
Communication is the cornerstone of effective environment where employees feel valued, supported,
organizational change management, particularly during and motivated to overcome challenges.
IMF-supported programs. As revealed by survey insights
from HR leaders across multiple countries, strategic Leadership, Participation, and Strategic
communication transcends mere dissemination of HR Orchestration
information; it becomes the linchpin for aligning Empowering Managers and Cultivating
organizational objectives, managing stakeholder Leadership Qualities
expectations, and fostering employee engagement.
Whether in Karachi, Mumbai, São Paulo, or Lagos, HR Effective leadership is essential for navigating the
professionals must adopt a nuanced approach to complexities of organizational change, irrespective
of location.

Focus Section
HR professionals play a pivotal role in empowering and adaptive leadership, organizations can not only
managers and cultivating leadership qualities at all levels weather the storm of economic uncertainty but emerge
of the organization. By providing leadership stronger and more agile in its wake. As stewards of
development programs, mentorship initiatives, and organizational change, HR professionals hold the key to
strategic delegation of responsibilities, HR fosters a unlocking the full potential of organizations amidst
culture of distributed leadership that promotes global economic turbulence, transcending geographical
innovation, collaboration, and accountability. As boundaries for a brighter tomorrow.
highlighted by survey insights, 85% of HR leaders Appendix: Summary of Responses
recognize the strategic importance of decentralizing
decision-making processes to ensure agility and 1. Gauging Psychological Impact of
responsiveness across borders. IMF-supported Reforms:
The Symphony of Participation • 85% of the surveyed HR heads emphasized the
significance of understanding and addressing the
Employee participation is not only a strategic imperative psychological impact of IMF-supported reforms on
but also a source of competitive advantage globally. HR employees. They highlighted that uncertainty
professionals must institute mechanisms for active stemming from economic reforms can significantly
participation, such as employee forums, cross-functional affect employee morale and productivity.
teams, and collaborative decision-making processes. By
harnessing the collective intelligence and creativity of • HR professionals strategically utilize a
employees worldwide, organizations can drive combination of surveys, focus groups, and
innovation, foster ownership, and enhance individual meetings to gauge employee
organizational resilience. As affirmed by survey findings, sentiment and identify areas of concern.
HR's role as the curator of a participatory culture is • 70% of respondents underscored the importance of
instrumental in ensuring that each employee feels implementing proactive support mechanisms, such
empowered, valued, and engaged in the organizational as confidential feedback channels and mental
journey, regardless of geographical location. health resources, to mitigate the negative
Conclusion: HR as Architects of psychological effects of reforms.
Transformative Change 2. Effective Communication Strategies:
In the tumultuous seas of economic reform, HR • Over 90% of HR heads emphasized the strategic role
professionals emerge as the architects of transformative of communication in navigating IMF-supported
change worldwide. By understanding the nuanced reforms. They stressed the importance of clear,
psychology of change, fortifying organizational resilience, consistent, and transparent communication to
and orchestrating a symphony of positive workplace foster understanding and alignment among
dynamics, HR becomes the driving force behind employees.
organizational success. Survey insights underscore the • Various communication channels, including town
strategic significance of HR's role, with 95% of HR leaders hall meetings, newsletters, and digital platforms, are
recognizing its importance in navigating IMF-supported strategically employed to disseminate information
reforms across borders. Through strategic and engage employees.
communication, proactive well-being initiatives, and
• Feedback mechanisms such as suggestion boxes
empowerment of leadership and participation, HR
and anonymous surveys are utilized by 80% of
professionals chart a course towards unprecedented
respondents to assess the effectiveness of
growth, adaptability, and resilience on a global scale.
communication strategies and make necessary
Moreover, the incorporation of international adjustments.
perspectives enriches the strategic framework presented
3. Establishing Support Systems:
herein. Insights from India, Brazil, and Nigeria offer
valuable lessons for organizations worldwide, • 75% of surveyed HR professionals highlighted the
highlighting the adaptive capacity of HR strategies strategic imperative of establishing robust support
amidst economic uncertainty. From leadership systems to address employee concerns and enhance
development programs in India to employee resilience during IMF-supported reforms.
engagement initiatives in Brazil and resilience-building • Regular one-on-one sessions and dedicated forums
strategies in Nigeria, organizations across borders are strategically implemented to provide employees
demonstrate resilience and innovation in navigating with opportunities to voice concerns, seek
economic reforms. clarification, and receive constructive feedback.
In conclusion, the strategic guidance provided • Confidential feedback channels and mental health
empowers HR professionals to navigate IMF-supported resources are strategically integrated into support
reforms with resilience and foresight. By embracing systems to ensure employee well-being and
strategic communication, proactive HR interventions, engagement.

Focus Section
4. Enhancing Organizational Resilience: 8. Monitoring Effectiveness of Strategies:

• 80% of HR heads emphasized the strategic • Over 90% of HR professionals strategically monitor
importance of enhancing organizational resilience the effectiveness of their strategies through a
through comprehensive training initiatives and skill combination of quantitative metrics and qualitative
development programs. feedback.
• Training initiatives strategically focus on not only • Key performance indicators related to employee
technical skills but also emotional intelligence, well-being, productivity, and organizational
adaptability, and change management to equip resilience are strategically tracked and analyzed.
employees for the challenges posed by reforms. • Continuous improvement is strategically emphasized,
• Mentorship programs and cross-functional training with HR departments adapting strategies based on
sessions are strategically utilized to foster a culture data insights and evolving organizational needs.
of continuous learning and resilience within the 9. Leveraging Technology for Communication
organization. and Participation:
5. Promoting Positive Work Environments: • 80% of respondents highlighted the strategic
• 85% of respondents emphasized the strategic importance of leveraging technology to facilitate
significance of promoting a positive work efficient communication and collaboration during
environment to enhance employee morale and reforms.
productivity during IMF-supported reforms. • Digital platforms such as employee portals and
• Recognition programs, internal storytelling platforms, collaboration tools are strategically utilized to
and stress reduction interventions are strategically enhance communication and participation.
employed to foster positivity and resilience. • Training initiatives are strategically implemented to
• HR departments strategically solicit feedback from ensure employees are proficient in using technology
employees to assess the effectiveness of these effectively to support organizational goals.
initiatives and make data-driven decisions to 10. Fostering a Culture of Continuous Learning:
enhance employee well-being.
• 85% of HR heads emphasized the strategic
6. Empowering Leadership at All Levels: imperative of fostering a culture of continuous
• Over 80% of HR professionals highlighted the learning and growth to prepare employees for the
strategic importance of empowering leadership at challenges of IMF-supported reforms.
all levels of the organization to foster agility and • Training programs, skill development workshops,
responsiveness during reforms. and knowledge-sharing initiatives are
• Leadership development programs and mentorship strategically employed to encourage ongoing
initiatives are strategically implemented to cultivate learning and development.
leadership qualities and distribute decision-making • HR professionals strategically promote a culture
responsibilities throughout the organization. of curiosity, experimentation, and adaptability to
• HR plays a strategic role in creating a drive organizational success in a dynamic
supportive environment where leadership is business environment.
encouraged, nurtured, and leveraged to drive
About the Authors: Rukhshinda Mehar brings over 15 years of extensive
organizational success.
experience in Human Resources, focusing on strategic HR planning,
7. Encouraging Employee Participation: learning and development, project management, and data analytics.
Throughout her career, she has held leadership positions in leading
• 75% of surveyed HR heads emphasized the strategic Pakistani companies, where she excelled in elevating HR functions through
imperative of encouraging employee participation data-driven strategies aligned with organizational goals. Additionally, her
during IMF-supported reforms to foster ownership consultancy background has enriched her practical insights, enabling her
and innovation. to deliver effective HR solutions across diverse industries.
• Mechanisms such as employee forums, Dr. Saqlain Sher, a distinguished HR leader with extensive experience
across various industries and esteemed organizations such as Saudi
cross-functional teams, and participatory Binladin Group, Descon Engineering, Doosan Babcock, Al Hassan
decision-making processes are strategically Engineering, PTCL & Ufone, and National Bank of Pakistan, brings strategic
implemented to promote active engagement. expertise to drive transformative change. With a solid academic
background including an MBA in HR and a Ph.D. in Organizational
• HR departments strategically track employee Sustainability, and certifications in SHRM-SCP, SPHRI, MCIPD, PMP, and
engagement metrics to measure the Lead Auditor ISO 30414, he strategically aligns HR practices with
effectiveness of participation initiatives and drive organizational objectives. He is a valuable member of ISO Technical
continuous improvement. Committee 260, representing Pakistan in the development of HR Standards.

Focus Section
IMF Influence: A Diagnosis of Pakistan's

Economic Dependency and the Role of
Chartered Management Accountants
Firm: I. The rich are taxed at
higher rate and the
A firm is a single, self-contained business entity that poor at lower rate. . .
produces and sells goods and services with the aim of
generating revenue and making a profit. J. Tax system is
transparent. . .
Industry:
K. Influential
A group of firms operating within same economic
sphere is called industry. L. Export
Finished-goods etc.
Sector: 2. Under-developed-
A group of industries with similar characteristics is Economy (Informal-
Abrar Hussain, ACMA
known as a sector. Economy).
Economy: Foreign Expenditures – Foreign Reserves =
Deficit-Forex-Reserves
A group of sectors engaged in the production of
GDP/productivity is known as economy. Characteristics of Under-developed Economy:
Kinds of Economy: A. Immature
1. Developed-Economy. B. Unpredictable-import based
2. Under-developed-Economy. C. Traditional
1. Developed-Economy (Formal-Economy): D. Deficit Forex-reserves
Foreign Reserves – Foreign Expenditures = E. Irrational-risky GDP
Surplus-Forex-Reserves
F. Little Influence
Characteristics of Developed Economy: G. Undocumented.
A. Mature
H. Based on indirect taxes.
B. Predictable and export-based
I. The poor and the rich are taxed at same rate.
C. Knowledge-based
J. ‘Hit and Trial’ Tax System
D. Surplus Forex reserves
K. Subordinate in nature
E. Sustainable-resilient GDP
L. Export raw material and raw human resource etc.
F. Ruling in nature
Besides having all required natural resources, a
G. Documented constitutionally independent Pakistan is
severely-economically dependent on world map
H. Based on directed taxes. . .
since 1947.

Focus Section
More than Seventy-Six (76) years has elapsed, alas! A ‘Mismanagement’, in economy, are its core areas of
massive number of 23 programs clearly shows that specialization. Over/under Costing and
Pakistan is obsessive to the Fund's hard love with mal-management are cultural symptoms of any
strict conditions. An Urdu poet express this IMF-clawed economy. Same is case of Pakistan since
trajectory as: independence. Private and Public sectors, to get resolved
their economic issues, must take on board ‘Chartered
Management Accountant’.
‘Institute of Cost and Management Accountants of
Where to Get Help: Pakistan’ is the authorized physician, under act of
parliament, to provide ‘OPD’ services to IMF-tortured
Allah (SWT) says in the Holy Quran:
economy. Its paramedical staff (CMAs) are highly
“Then do they not reflect upon the facts narrated by Quran? trained and equipped with all modern tools and
Or are there locks upon their hearts?” [Surah Muhammad, techniques to cope with chronic germs of
Ayat 24]. mismanagement and wrong costing. Just there is need
to consult CMAs’ Clinic, economy will be leading in world!
In this Ayat Allah (SWT) demands the leadership to use
granted Perception, and cognitive processes of The universal legislator, Sir Iqbal (R.A) gives following
comprehension to get-rid of IMF. insights to CMAs to have robust Pakistan on ‘Global Map’:
“This is straight path. So, follow it, and do not follow the
other ways, lest they make you diverge from His way” [Surah
Al-Anam, Ayat 153].
This Ayat emphasis on research and critical thinking
rather than following cultural rites and traditions i.e.
availing tight financial facilities (Credit Lines) with hefty
markup/claimed reforms and stay in comfort-zone.
“It is Allah who created the seven heavens and likewise for
the earth. His command descends throughout them, all is
being stated that so you may know that Allah has power About the Author: The writer is a Chartered Management
over all things. He is Most Capable of everything and that Accountant and an Associate member of ICMA, as well as a member of
the Pakistan Institute of Public Finance Accountants (PIPFA). With over
Allah certainly incorporates all things in His knowledge” fourteen (14) years of diversified-industrial experience at the
[Surah At-Talaq, Ayat 12]. professional level, he has worked in Beverage (Pepsi-Cola), Weaving,
and Spinning industries. Additionally, he is actively involved in
The Quran encourages us to gain knowledge and
stewarding and promoting his own agriculture farm.
scientific discovery through travel and observation and
become honorable nation on the global map!
‘Chartered Management Accountant’ is the economy’s
physician. Doctoring the ‘Wrong Costing’ and

Focus Section
The Impact of IMF Lending on Developing Nations:

Case Studies from Ghana, Serbia, Ireland, and Jamaica
By: Research and Publications Department, ICMA
The International Monetary Fund (IMF) plays a crucial role 2) Standby Credit Facility (SCF): Similar to SBA,
in fostering sustainable development and growth for its designed for low-income countries to manage
approximately 190 member nations. The IMF supports short-term balance of payment issues.
these objectives by backing economic strategies, policies,
3) Extended Fund Facility (EFF): For economies facing
and regulations that ensure stability in financial and
long-term balance of payment challenges, extending
monetary sectors. These sectors are vital for enhancing
over a period of 3 years or more.
productivity, creating job opportunities, and driving
economic prosperity. The governance and transparency 4) Extended Credit Facility (ECF): Similar to EFF but
of the IMF are maintained by its member countries. specifically for low-income countries, addressing
medium to long-term structural challenges.
The IMF focuses on three key goals: (i) strengthening
international monetary cooperation, (ii) promoting 5) Rapid Financing Instrument (RFI): Provides
economic diversification and trade, and (iii) dissuading immediate financial assistance for balance of
policies or regulations that could impede prosperity. To payment needs, including natural disasters or
achieve these goals, the IMF facilitates collaboration commodity price shocks.
among its member economies and with international
organizations. 6) Rapid Credit Facility (RCF): Rapid assistance for
low-income countries facing emergencies, with a
The IMF also offers technical assistance and training to grace period of 5 years and a maturity of 10 years.
help countries build robust institutions and improve
economic policies. By sharing best practices and 7) Flexible Credit Line (FCL): For countries with strong
providing targeted advice, the IMF supports member policies but facing urgent cash shortages, offering a 1
countries in their efforts to achieve sustainable growth to 2-year credit line.
and development. Furthermore, the IMF conducts regular
8) Precautionary and Liquidity Line (PLL): Addresses
surveillance of global and national economies, providing
liquidity needs of economies with strong policies but
insights and guidance on economic stability and risks.
residual issues.
This continuous monitoring helps the IMF anticipate
challenges and offer timely assistance to its members. 9) Catastrophe Containment and Relief Trust (CCRT):
Provides grants instead of loans to poor countries
Types of IMF Loans during natural disasters or crises.
IMF offers various types of loans tailored to the specific
10) Policy Support Instrument (PSI): Offers
needs and circumstances of member economies:
non-financial assistance to low-income countries for
1) Stand-By Arrangement (SBA): A short to policy advice and support, lasting 1 to 5 years.
medium-term loan for developing and developed
These loans aim to support economic stability, growth,
economies to address balance of payment or
and development, tailored to the specific needs and
short-term issues.
circumstances of each member economy.

Focus Section
Success stories of IMF lending 2) Serbia's IMF Program:

Achieving Economic Success
1) Ghana's IMF Program:
Restoring Africa's Luster Since 2008, Serbia has faced economic volatility, which
worsened in 2014. The country's economy experienced
In 2015, Ghana experienced economic stagnation due to weak public institutions, unmet tax
instability, characterized by escalating deficits, high collection targets, and increased government spending,
inflation, and currency devaluation. These challenges were leading to a swift accumulation of public debt. In
worsened by excessive government spending and response to this concerning situation, the government
dwindling credit reserves. In response, Ghana sought
initiated a plan to implement fiscal reforms, strengthen
assistance from the International Monetary Fund (IMF) and
the financial sector, and pursue an inclusive economic
obtained a US$918 million loan. The IMF recommended a
three-year plan to help Ghana stabilize its economy: program. The International Monetary Fund (IMF)
supported these efforts with economic guidance,
• Fiscal Reforms: The plan called for controlling debt regulatory advice, and preventive financing to assist
by capping wages, eliminating subsidies, and Serbia's recovery.
boosting tax revenue through efforts to combat tax
evasion.
• Monetary Policy: The IMF suggested establishing a 10
percent
Inflation
robust monetary policy framework to address 2015-18

program
budget deficits and bring down inflation. 5
GDP growth
• Banking System Reforms: The plan included 0
measures to improve the banking system, such as

addressing under-capitalization, enhancing asset -5
quality through bank recapitalization, and 0
implementing stronger regulatory measures.

-4
fiscal balance
Ghana: On the Mend percent of
GDP
20
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 -8
15
Figure 2: Serbia Growth Returns restored after
10 IMF-supported program
Source: IMF
5
0 Outcome
2014 2015 2016 2017 2018 2019
-5
Following three years of rigorous implementation of the
-10
planned program, Serbia successfully emerged from its
-15 economic challenges. In 2014, the country had one of
GDP % Chng Inflation Budget balance % GDP
the highest fiscal deficits in Europe, but by 2017, it
Figure 1: Ghana’s GDP, Inflation and Budget Balance at glance reported a surplus. Economic confidence improved with
Source: IMF increased financing and investment from both
Outcome domestic and international sources. By 2018, layoffs and
factory closures had declined significantly. The banking
In 2019, Ghana achieved a remarkable increase in its sector exhibited strength, and the volume of
economic growth rate, rising to 8.8% from 2.2% in 2015. non-performing loans decreased compared to the
The inflation rate also dropped significantly, from pre-crisis period.
approximately 19% to 8%. As a result of fiscal discipline,
the country was able to allocate revenues to support 3) Rebounding from Economic Turmoil:
social services such as free secondary education. For the Ireland's Path to Recovery
nation's population of around 28 million, Ghana
In 2007, Ireland's economy faced severe challenges due
provided market-competitive salaries and wages, job
to a fiscal crisis intensified by the global financial
opportunities, and enhanced purchasing power.
downturn and domestic vulnerabilities. The collapse of
Although Ghana continues to rely on external financing
and faces fiscal challenges, it has successfully improved the property bubble led to a decline in foreign
its pace of development and achieved notable investment and a significant increase in bank debt related
economic progress. to property loans, adversely affecting economic activity.

Focus Section
Tax revenues fell by 20% within two years, compelling the vulnerability to natural disasters, a brain drain, rising
government to assume responsibility for major banks in crime rates, and emigration. By 2013, Jamaica's public
2008, which equated to around 30% of GDP. This crisis debt had reached 147% of GDP, making it one of the most
persisted until 2010, resulting in an outflow of 60 billion indebted economies worldwide. To address these issues,
euros, nearly one-third of GDP, and an unemployment Jamaica sought financial support from the International
rate that climbed to 15%. In 2010, facing economic Monetary Fund (IMF).
challenges, Ireland sought assistance from the IMF and
Due to its weak policy history and substantial budget
EU, receiving a loan of 67.5 billion euros, equivalent to
deficits, Jamaica underwent a second debt exchange and
10% of its economy.
aimed to achieve a surplus equivalent to 7.5% of GDP to
Outcome stabilize the economy and tackle enduring structural
problems. Under the IMF's Extended Fund Facility (EFF) in
IMF recommended that the Irish government 2013 and a subsequent Stand-By Arrangement (SBA)
implement a series of measures to address the spanning six years, Jamaica managed to stabilize its
economic crisis, including bank mergers, staff economic situation.
reductions, and aligning assets with deposits. The
government launched a three-year plan to reduce the The country benefited from strong capacity-building
budget deficit, which involved raising taxes, cutting support from international financial institutions and
spending, and undertaking reforms that contributed to other partners, which enhanced social outcomes and
an 8% reduction in GDP. Although the initial contributed to the nation's economic recovery.
implementation faced challenges, Ireland's economy
began to recover by 2012. This recovery was marked by Outcome
increased investment, a reduction in bank arrears, and Jamaica achieved fiscal sustainability by maintaining a
an improvement in property prices. By 2018, the 7% GDP surplus for six consecutive years, reducing
unemployment rate had fallen to below 6%, reflecting public debt to below 100% of GDP. Tax reforms,
significant economic progress. including a shift to indirect taxes supported by the IMF
and Inter-American Development Bank, yielded
Real GDP growth (Annual percent change) 1.5 significant benefits. Unemployment decreased,
Inflation rate - average consumer prices (Annual percent change 2.4 business confidence rose, and poverty levels declined.
25 Economic development improved with sectors like
20
mining becoming more active. IMF assistance increased
investment in social and capital projects. Financial
15 sector reforms strengthened securities dealers and
10 financial institutions. Jamaica's recovery serves as a
5
model for other vulnerable economies facing crises.
0
Public debt (percent GDP)
3.3
-5
Net international reserves (million US$)(RHS)
3 150 3,500
-10
130 2,500
1980 1985 1990 1995 2000 2005 2010 2010 2020 2025
Figure 3: GDP growth and inflation rate of Ireland over the years 110 1,500
Source: IMF
4) Jamaica & IMF: 90 500

3 4
Partnership's Strength 2/1 3/1 /15 /16 /17 /18 /19
201 201 0 14 015 016 017 18
FY FY Y2 Y 2 Y 2 Y2 Y20
F F F F F
In 2008, Jamaica's economy was significantly affected by
the global financial crisis, resulting in policy Figure 4: Jamacia’s on recovery path
shortcomings and a sharp increase in public debt. The Source: IMF
country faced additional challenges, including

Focus Section
IMF and Pakistan: • In 1981, Pakistan received from IMF US$730,000

A Rocky Relationship (equivalent to US$2,349,788 in 2022) in 1981 due to
ongoing US cold war against Soviet Union.
Pakistan has relied on IMF funding to
address economic challenges during 198-2007:
periods of political instability. Below is a timeline
• Economic decline observed post-Soviet-Afghan war,
illustrating the relationship between the International
leading to seeking IMF loans.
Monetary Fund (IMF) and Pakistan:
• During the 1988-90, in Benazir Bhutto's first regime,
1958:
US$4 billion as foreign loans and US$1.11 billion as
• Pakistan joins the International Monetary Fund (IMF). grants were received by the country
• IMF lent out US$25,000 (equivalent to US$253,576 in • Over the 1988–2001 period, Pakistan had seven IMF
2022) to Pakistan on standby arrangement basis arrangements, four short-term and three multiyear
arrangements.
1965-1968:
• Pakistan entered into a stand-by arrangement with
• Two IMF programs were pursued back-to-back by the the IMF in 2000 for a nine-month period followed by
then President Ayub’s finance team in 1965 and 1968 a three-year Poverty Reduction and Growth Facility
(PRGF)
• Pakistan again sought to borrow from the IMF
• During General Pervaz Musharraf regime from 2000 to
• IMF provided to Pakistan US$37,500 (equivalent to
2001, IMF granted loan of US$1.5 billion to Pakistan
US$348,231 in 2022) on 16 March 1965
• During 1999 to 2007, around US$17.503 billion was
• Pakistan again applied to IMF for the third time on 17
borrowed
October 1968 due to balance of payment issues and
received US$75,000 (equivalent to US$631,148 in 2022) 2008:
1972-1977: • Asif Ali Zardari's government seeks IMF loan amid
economic troubles upon assuming office.
• Pakistan seeks IMF funding for three consecutive
years due to economic challenges following the • In 2008, the government secured the biggest IMF
separation of East Pakistan and global recession. bailout package in history which was of US$7.2
billion
• Pakistan got loan of US$84,000 (equivalent to
US$587,666 in 2022) in 1972, US$75,000 (equivalent 2013-2023:
to US$494,415 in 2022) in 1973.
• During the regime of PML-N in 2013, IMF granted the
• Another of loan by IMF of US$75,000 (equivalent to 2nd highest loan which amounted to US$4.4 billion
US$445,040 in 2022) in 1974 was lent to Pakistan to under the Extended Fund Facility
meet its growing needs.
• In 2019, the PTI government received loan of US$4.3
• Pakistan had four one-year Stand-By Arrangements billion
(SBAs) with the IMF between 1972 and 1977
• In 2020, the IMF only owed around US$9 billion out
1980-1981: of Pakistan’s US$112 billion external debt.
• Earlier SBA of 4 years was followed by a three-year • In 2022, reaching US$1.64 billion loan, underscore the
extended arrangement in 1980 deepening financial reliance of Pakistan on the IMF
• IMF loans taken during the Soviet-Afghan war period • In May 2023, Pakistan received the first tranche of
to bolster defense and economic strength. US$1.2 billion from IMF
• In 1980, an extended facility of US$349,000 • The US$700 million fund represents the second
(equivalent to US$1,239,542 in 2022) from IMF was tranche of the IMF bailout signed with Pakistan in
reached in 1980 June 2023.

Focus Section
10000000000 Standby
Arrangement
Extended Extended
Credit Facility Fund Facility
8000000000
Extended
Fund Facility
6000000000
Standby
Arrangement
Structural
4000000000 Adjustment
Extended Standby Extended
Facility Arrangement Credit Facility
Fund Facility
Commitment
Extended Fund Standby Standby Extended Extended Standby

Standby Arrangement Facility Credit Facility Fund Facility Arrangement
Arrangement Arrangement $3,015,000,000
2000000000
0
Dec 08, Mar 16, Oct 17, May 18, Aug 11, Nov 11, Mar 019, Nov 24, Dec 02, Dec 28, Dec 28, Sep 16, Feb 22, Feb 22, Dec 13, Oct 20, Oct 20, Nov 29 Dec 06, Nov 24, Sep 04, Jul 03, Jul 12
1958 1965 1968 1972 1973 1974 1977 1980 1981 1988 1988 1993 1994 1994 1995 1997 1997 2000 2001 2008 2013 2019 2023
Figure 5: IMF Lending Commitments with Pakistan from 1958 to 2023

Source: IMF
• In November 2023, Pakistan and IMF reach deal for Way Forward
releasing US$700m from US$3bn bailout package
1) Reduce Domestic Borrowing Costs: Pakistan
• In the FY2023, Pakistan’s IMF loans amounted to a should negotiate and reduce domestic borrowing
substantial US$894 million, accompanied by charges interest rates by 5-6% and revise policy rates linked
and interest payments totaling US$776m and to inflation with the IMF, aiming to lower financial
US$325.8m, respectively costs and increase deficit savings.
2024: 2) Focus on Productive Investments: Redirect
investments towards productive areas like
• Economic Coordination Committee approved
manufacturing to enhance exports and alleviate
Rs. 272 billion in technical supplementary grants for Pakistan's balance of payments crisis, with Special
fiscal year 2023-24 Economic Zones being prime investment
• Pakistan ranks fifth in outstanding debt with the IMF, destinations.
standing at US$7.4 billion 3) Continue SOE Privatization: The privatization of
Over the years, the relationship between Pakistan and state-owned enterprises (SOEs), exemplified by the
interim government's actions with Pakistan
the International Monetary Fund (IMF) has been
International Airlines (PIA) and First Women Bank
marked by periodic interventions aimed at addressing
Limited (FWBL), should be swiftly and zealously
economic challenges and stabilizing the economy. The
continued, extending to key sectors like power,
country's most recent IMF bailout represents its 23rd
railways, and oil and gas.
lending commitment. Despite these interventions,
Pakistan continues to face a recurring cycle of 4) Develop Sukuk Market: It is imperative to launch a
economic instability and reliance on IMF loans. This full-fledged sukuk market that shall not only increase
ongoing dependency highlights the need for our Gross National Savings Rates multifold but also
comprehensive structural reforms to break the cycle has the capacity to finance 70-80% of our public
and achieve long-term economic stability. sector development program.

Focus Section
5) Increase Direct Tax Revenue: Increase the direct tax 9) Prioritize Fiscal Reforms: Pakistan should prioritize
revenue multifold by implementing a 10% ushar on implementing fiscal reforms to address issues such as
agriculture produce, which averages US$68-70 unmet tax collection targets and excessive
billion per annum, making Pakistan the government spending. Strengthening public
seventh-largest producer of agriculture in the world. institutions and improving tax collection efficiency
can help reduce the accumulation of public debt.
6) Streamline Federal Government: Reducing the
size of the federal government to not more than 10) Seek International Expertise: Seeking assistance
12-15 ministries and slashing the grants and and advice from international experts who have
subsidies by 30%. experience in managing similar economic challenges
can be beneficial. Pakistan can collaborate with
7) Implement Robust Monetary Policy:
experts from countries like Norway and the US to
Implementing a robust monetary policy framework
develop and implement effective strategies for
can assist Pakistan in managing budget deficits and
economic recovery.
controlling inflation, ultimately stabilizing the
economy and alleviating inflationary pressures. 11) Leverage Global Support: Pakistan can benefit
from capacity-building support from international
8) Strengthen Banking Resilience: Pakistan can focus
financial institutions and other partners, similar to
on improving the resilience and stability of its
Jamaica. Strengthening institutional capacity and
banking system by implementing measures to
receiving technical assistance can help Pakistan
reduce non-performing debts and enhance
implement reforms effectively and achieve better
regulatory oversight.
social outcomes.

Articles Section
Articles Section
Organizational Excellence
through Diversity
A
ttaining results is the function of collaborative responsibility is identified
efforts of multiple subsystems and individuals with the most senior
within a bigger system referred to as person, while others are
organization. Different schools of thoughts exist as to considered to assist the
how the subsystems and individuals should be boss by performing Sohailuddin Alavi
organized to attain the organizational results. Some preparatory or sometimes
types of organization designs are more conducive, and as referred to “donkey” work. In such scenarios, boss
some are not so conducive. Put it differently, we have keeps the authority and delegates the responsibility. In
basis to contemplate that diversity is critical for this system all the work is done by the subordinates
innovation, synergy, and performance excellence. while the credit of doing the work goes to the boss. The
irony of this system is that regardless of how critical,
Organizations are like a typical wardrobe – you
complex, or sensitive a task may be, it is assigned to the
organize it over a weekend, and you would need to do
most junior employee. Seniors are only there to get
it again on the next weekend. Organizations lose
things done. In short, the senior distributes his entire task
rationality in their systems and processes over time,
list amongst his subordinates. The consequence is that
hence the need to keep revisiting the systems and
subordinates may be or may not be fit to perform the
processes is inevitable. Bryan Joiner in his book titled,
tasks, especially ones which are critical, complex, and
“Fourth Generation Management” had pointed out that
sensitive yet given to them. In this situation,
often newer organizations outperform their older
subordinates are forced to do tasks in a stereotype
counterparts. Rationality is often compromised due to a
manner, as they would lack the clarity and
host of reasons. For example, changes in the permeable
empowerment needed to perform with diligence. A few
environment reshape the opportunities and challenges
proactive subordinates when assigned high level task,
facing the organizations. Moreover, organizations’
also proclaim authority from their seniors. Not having
traditional strengths also become irrelevant over time
the required level of clarity and empowerment,
and often weaknesses go unattended causing serious
inevitably they tend to exercise authority for their
issues. Likewise, people competencies if not
personal gratification. On the other hand, the inputs of
augmented with time turn into weaknesses. So on and
senior incumbents are minimized, rendering them
so forth. Being said, rituals eclipse organizational
practically redundant. Managers often can be heard
rationality and the competitiveness is oftentimes
saying, “I have done too much when I was a subordinate,
compromised. It is evident that many times newcomers
now it is time for me to sit back.” Author Kenneth Davis in
outperform the existing ones.
his book titled, One Minute Manager described these
1) Conventional Organizations people as, “Some managers wear sunglasses and sleep in
their offices until someone makes a mistake, then they
In a typical conventional organization, top-down wake-up to reprimand.” At the end, the much-needed
approach is followed. Employees’ positions are identified innovation, synergy and performance excellence are
based on employees’ locus on the hierarchy. However, compromised beyond the affordability. Consequently,
roles are largely eclipsed. Individuals are identified as organizational performance gets restricted to actions,
seniors vs. subordinates. In most of the situations, work but no intrinsic results are attained.

Articles Section
Examples of conventional organization design abound organizational politics. For example, it is seen that
in our world of work. Like, typical public sector functional staff and executives for no reason intervene in
organizations. Bureaucracy model of organizations is policy formulation sometimes even does it
totally based on this concept. Once I met a Principal of a independently. Likewise, managers and senior managers
professional academy in a govt. organization. The naïve of their actual roles engage themselves in
functional tasks.
gentleman had recently been transferred from
operations to head training function. I asked him as to 3) Diverse Organizations
how does he see his current job different from the earlier
one. He naively said, “There is no difference, I was A more rational approach calls for designing the roles
working at Basic Pay Scale 18 and this position is of the along the value chain. Meaning, each employee should
same rank” – once a boss always a boss. In short, his role have a recognizable input [KPI] and should have more
perception was simply to administrate, which requires control on the overall task. Doing so, it will enhance
him to exercise authority over the employees. Here, the employees’ ownership and excitement. To do this, it
sole competence for him is his authority – authority to entails optimally empowering the employees and
hire and fire and authority to control employees. The making the jobs independent. Doing so, the efficiency
manager is unable to see his role beyond this, hence will go up, cost of doing the job will come down and
does not consider need for management skills per se. last but not the least, accountability can be more
precisely fixed.
2) Pseudo Teamwork Organizations Diverse Organization is the one that works on the
Theoretically speaking, teamwork usually brings in premise of right person for the right job. Employees can
diverse skillset and roles whereby complex tasks are still be placed at various positions on the hierarchy but
completed in a befitting manner. However, on ground not to reflect on their status or ranks. Instead, it should
this does not happen. An example of such organizations reflect their independent roles. Roles can be
is the “Pseudo Teamwork Organization.” Such differentiated based on required competency and
organizations are by default organized along the empowerment. This follows that managers should
administrative hierarchies with all the gratifications of identify tasks along the value chain and group them into
ranks and statuses, yet under the disguise of teamwork functional, executive, and strategic tasks. Each employee
everyone tries to show his or her involvement in others’ should be independently made responsible for the
tasks sometimes even by ignoring to do their assigned completion of a specified task. For example, the senior
jobs – typically a “Photo Session” syndrome. Put it manager should focus on planning and strategy, the
differently, the manager, supervisor and subordinates all managers should focus on making operational decisions
do same tasks. For example, in a typical pseudo sales and trouble shooting and the functional level employees
team, the sales agents would be making sales. The sales should execute routine tasks. All should do their
supervisor will report his performance by summing up respective tasks within the given parameters.
the sales of individual sales agents. Then the sales
Doing so organizations can attain the standard of “right
manager would report his performance by summing up
person at the right job” in letter and spirit and can ensure
sales performance of all the sales supervisors. Whereas,
that everyone adds a unique value to the whole. We have
in reality only the sales agents make the sales, while
evidence that in this scenario, the diversity of roles and
others simply leverage their performance. However,
inputs from so many persons leads to innovation and
exceptions to this exist. Similarly, in an office
synergy which in turn cause performance excellence.
environment the most junior would write a document,
which would then go to next senior person for some Examples of these type of organization may not
changes and then would go to the senior most for abound but such organizations do exist in our world of
making final changes. It can be clearly seen that the work. Former Country Head of IBM, Pakistan had this
junior most does the creative work, while others leverage habit of asking his IT managers not to work as software
their input, by making some changes, sometimes developer no matter how exciting it may look to them:
necessary and at times only to justify their input. Thus, He use to tell them that you are a manager and has
the cost of doing a task is multiplied by the number of something more critical to do. Once, I personally
employees. Isn’t this an expensive proposition besides happened to conduct Goals Setting exercise for a
diluting the ownership and excitement of the real doer? division of a corporate entity. When I had finished
helping the officers setting their goals, the head of the
Another deterring effect of pseudo teamwork is that
department categorically asked me what his goal
employees usually encroach each other’s roles thus
should be. Should it be a cumulative performance of all
moving away from their actual given responsibilities,
officers, in that case he has no task but just to wait and
which becomes a major deterrent and give boost to intra
see how the subordinates would perform.

Articles Section
Table One
Group Role Key Responsibility Areas
Senior Managers Strategic  Set business direc ons.
 Define policies & rules.
 Define outcomes.
 Mobilize resources.
 Integrate across diverse groups
within the organiza on.
 Link with outside organiza ons
Managers Execu ve  Formulate opera onal plans and
budgets.
 Make opera onal decisions.
 Shoot problems and ini ate
correc ve ac ons.
 Coordinate within and across
different func onal departments.
 Manage employees’ performance.
 Develop and facilitate employees.
 Link between strategic and
administra ve ers
Associates (Front end Func onal  Perform or execute tasks as per
Employees) standards and opera onal plan
He got excited when I advised him to consider his goals  Organizations can only sustain when they
as to how he could make his subordinates be successful continually improve their performance bars all the
in doing their jobs rather than proclaiming their time. “We raise our performance bar every day,” says
performance as his. In fact, his entire work paradigm had Lackson Group.
changed. This elaborates how roles need to be defined
 Organizations must be quick and innovative in
along the value chain so that a natural and mutually
responding to their environment and addressing
enriching interdependence amongst employees is
their challenges. This means, how fast an
established for higher organizational performance.
organization adopts to new ways of doing the
4) Recommendations business?
It is time to design diverse organizations for unleashing  Everyone should bring in diverse competencies and
optimal performance. A diverse organization consist of focus on his respective role thus synergizing the
three fundamental roles and competencies namely, whole. It is very much likely that a functional
Strategic; executive; and functional. Each role has its competence will not help an employee to perform
unique key responsibility areas and so are the equally well in a manager’s role, for each role is
corresponding competencies (See Table One). It is different hence the requirement for competencies at
pertinent to make a point here that the roles should be each level. Having said this, significance of retooling
complimentary to each other on the value-chain, cannot be over emphasized for career planning and
however, must not be overlapping across employees. advancement.
5) Conclusion  Hierarchies need to be flexible enough to allow cross

functional teamwork and matrix relationships.
All organizations have the potentials to innovate,
About the Author: The writer holds a professional qualification in
synergize and achieve performance excellence, but how Banking and Finance. He is a practicing Human Resources and
they prepare for it and approach it makes the difference. Organizational Development Professional, having more than three
The discussion can be summarized in a few statements decades of hands-on experience in his field. He has authored books
as cited below. and publishes extensively.

TOP TECHNOLOGY TREND
To p Te c h n o l o g y T r e n d
Industry 4.0 Transformation

Industry 4.0, also known as the Fourth Industrial Revolution, Overall, Industry 4.0 aims
embodies the transformation of traditional manufacturing to drive digital trans-
and industrial processes through cutting-edge digital formation across indust-
technologies. It integrates advanced tools such as artificial ries, revolutionizing tradi-
intelligence (AI), robotics, the Internet of Things (IoT), big tional manufacturing and
data analytics, cloud computing, and cyber-physical production methods to
systems into production environments, fostering create more efficient, Intzar Hussain Rana, FCMA
interconnected ecosystems. This convergence facilitates flexible, and agile manu- Member (elect)
seamless communication among machines, devices, and facturing ecosystems. ICMA Na onal Council 2024-26
individuals, leading to unparalleled levels of automation,
optimization, and insight.
Tr a n s f o r m a t i o n
Strategy
Key features of Industry 4.0
Transforming a heavily invested traditional industry into
a) Interconnectivity: Machines, devices, sensors, and Industry 4.0 requires careful planning, strategic
people are connected through the IoT, enabling implementation, and a commitment to change from top
seamless communication and data exchange management down to the workforce.
between them.
Here's a methodical approach:
b) Data Analytics and Big Data: Large volumes of data
generated by interconnected systems are analysed a) Assessment, Planning and Gap Analyses: Perform a
in real-time using advanced analytics techniques, comprehensive evaluation of current processes,
providing valuable insights for decision-making and technologies, and infrastructure to pinpoint areas for
optimization. enhancement and opportunities for digital
c) Automation and Robotics: Advanced robotics and transformation. Set clear objectives and goals that are
automation technologies are utilized to streamline in line with the overarching business strategy and
manufacturing processes, improve efficiency, and objectives. This involves conducting a thorough gap
reduce human intervention in repetitive tasks. analysis to identify existing inefficiencies, outdated
processes, and areas where integrating technology can
d) Augmented Reality (AR) and Virtual Reality (VR): AR and
lead to significant improvements. Additionally, assess
VR technologies are used to enhance manufacturing
the current state of technology infrastructure,
processes by providing immersive training
experiences, remote assistance, and visualization of workforce skill sets, and organizational readiness for
complex data. embracing digital transformation.
e) Additive Manufacturing (3D Printing): Additive b) Create a Vision and Strategy: Craft a crystal-clear
manufacturing technologies enable the production of vision delineating what Industry 4.0 signifies for your
complex parts with greater flexibility and customization, organization, encompassing amplified efficiency,
leading to reduced waste and faster prototyping. productivity, agility, and competitiveness. Formulate a
meticulously detailed strategy delineating the path
f) Cybersecurity: With increased connectivity comes the
toward realizing this vision. Incorporate timelines,
need for robust cybersecurity measures to protect
sensitive data and systems from cyber threats and attacks. resource allocation, and key performance indicators
(KPIs) to meticulously measure progress.
g) Smart Factories: Industry 4.0 promotes the
development of smart factories where interconnected c) Invest in IoT Instruments, Infrastructure and
systems and intelligent machines work together to Technology Integration: Meticulously evaluate and
optimize production processes, minimize downtime, select fitting IoT instruments, sensors, and connected
and respond quickly to changes in demand or supply devices to gather real-time data from machinery,
chain disruptions. equipment, and production processes.

Seamlessly integrate these devices with existing h) Cybersecurity and Data Privacy: Implement robust
systems and machinery to facilitate data-driven cybersecurity measures to protect sensitive data,
decision-making, predictive maintenance, and process systems, and intellectual property from cyber threats
optimization. This necessitates identifying and and attacks. Ensure compliance with relevant
investing in essential digital technologies and regulations and standards related to data privacy and
infrastructure crucial for Industry 4.0 transformation, security.
including IoT devices, sensors, camaras, data analytics i) Sustain and Evolve: Foster a culture of innovation and
platforms, cloud computing, and cybersecurity agility to adapt to evolving market trends,
solutions. Collaboration with technology providers and technological advancements, and customer needs.
industry experts can expedite implementation while Continuously evaluate and evolve the organization's
mitigating risks. digital capabilities to stay competitive in an
d) Employee Training, engagement, and Change increasingly digitalized landscape.
Management: Invest substantially in comprehensive j) Safety Aspects: Prioritize safety considerations
training programs tailored to enhance employees' throughout the digital transformation process to
proficiency in digital technologies, data analytics, and ensure the well-being of employees and the integrity
innovative work methodologies, underpinning their of operations. Implement safety protocols and
transition to the industry 4.0 landscape. Provide measures for IoT devices, machinery, and automated
continual learning opportunities and support systems.
mechanisms to facilitate employees' adaptation to
k) Data Governance and Privacy: Establish clear data
evolving roles and responsibilities.
governance policies and protocols to ensure the
Cultivate a culture of engagement, collaboration, and security, integrity, and privacy of data collected from
transparent communication among employees to IoT devices and digital systems. Comply with
foster buy-in and support for the transformation regulations and standards related to data protection,
initiative. Involve employees at all levels in privacy, and cybersecurity to mitigate legal and
decision-making processes, offering training and reputational risks.
resources to empower them to embrace new
l) Performance Metrics and Continuous Improvement:
technologies and navigate changing roles effectively.
Define key performance indicators (KPIs) to measure
Encourage a culture of innovation, ongoing learning,
the success and impact of Industry 4.0 initiatives on
and adaptability to promote employees' acceptance of
productivity, efficiency, quality, and customer
the changes brought about by digital transformation.
satisfaction. Continuously monitor and analyse
Develop a robust change management strategy to performance metrics to identify areas for improvement
address resistance and overcome organizational inertia and optimization and iterate on strategies accordingly.
efficiently. Ensure transparent communication of the
By meticulously addressing these aspects, traditional industries
vision, objectives, and benefits of Industry 4.0
can adeptly navigate the complexities of digital transformation
transformation to employees, stakeholders, and
and fully realize the potential of Industry 4.0 to propel
relevant parties.
innovation, competitiveness, and sustainable growth.
e) Pilot Projects and Proof of Concepts: Commence
with small-scale pilot projects or proof of concepts to Benefits of Industry 4.0
vet new technologies and processes in a controlled The transformation to Industry 4.0 brings about significant
environment. Solicit feedback from stakeholders, enhancements to the baseline of data collection from
monitor performance metrics, and iterate on solutions sensors to digital meters of machinery and facilitates
before scaling them across the organization. numerous improvements across various aspects of
f) Integration and Collaboration: Ensure seamless operations, including production efficiency, utilities
integration of digital systems and processes across utilization, waste management, planned maintenance, and
different departments and functions within the integration with enterprise resource planning (ERP)
organization. Foster collaboration and systems. Let's explore each of these benefits in detail:
communication between IT and operational teams to a) Production Efficiency: With sensors and digital meters
align technology initiatives with business objectives installed on machinery, real-time data on production
and operational requirements. metrics such as throughput, cycle times, and downtime
g) Monitor and Optimize Performance: Establish can be collected continuously. This data enables
mechanisms for monitoring and analysing key operators and managers to identify inefficiencies,
performance indicators (KPIs) related to productivity, bottlenecks, and areas for improvement in the
efficiency, quality, and customer satisfaction. production process promptly. By analysing this data,
adjustments can be made to optimize production
Continuously optimize processes and workflows based workflows, streamline processes, and maximize overall
on data insights and feedback to drive continuous equipment effectiveness (OEE).
improvement and innovation.

b) Utilities Utilization and Waste Management: b) ROI Uncertainty: Calculating the return on investment
Sensors can monitor energy consumption, water (ROI) for Industry 4.0 initiatives can be complex, as the
usage, and other utility metrics in real-time, providing benefits may not be immediately tangible or easily
insights into resource utilization and identifying quantifiable. It can be challenging for organizations to
opportunities for efficiency improvements. By justify the upfront investment without clear visibility
analysing data on utilities consumption and waste into the expected returns and payback period.
generation, organizations can implement strategies to c) Legacy Systems Integration: Integrating new digital
reduce energy and resource waste, lower operating technologies with existing legacy systems can be
costs, and minimize environmental impact.
complex and costly. Legacy systems may not be
c) Planned Maintenance: IoT sensors can monitor designed to communicate or interoperate with
equipment health and performance parameters, modern IoT devices, analytics platforms, or cloud
providing early warning signals of potential equipment services, requiring additional investments in
failures or maintenance needs. Predictive maintenance middleware, APIs, or system upgrades.
algorithms analyse sensor data to predict when
d) Skill Shortages: The successful implementation of
equipment is likely to fail, enabling maintenance teams
Industry 4.0 technologies requires a workforce with
to schedule proactive maintenance activities before
specialized skills in areas such as data analytics,
breakdowns occur. Planned maintenance based on
cybersecurity, IoT, and AI. However, many organizations
data-driven insights helps minimize unplanned
may struggle to recruit or train employees with these skills,
downtime, extend equipment lifespan, and optimize
leading to talent shortages and increased labour costs.
maintenance schedules to maximize productivity.
d) Integration with ERP Systems: Seamless integration e) Risk Management: Embracing new technologies
between sensor data and ERP systems enables inherently involves risks, including cybersecurity
automatic transfer of production data, maintenance threats, data privacy concerns, and operational
schedules, and other relevant information without disruptions. Investing in robust cybersecurity
disrupting workflow. This integration provides measures, compliance frameworks, and risk mitigation
real-time visibility into production status, inventory strategies is essential but can add to the overall cost of
levels, and resource utilization, enabling better transformation.
decision-making and resource allocation across the f) Change Management: Overcoming resistance to
organization. change and fostering a culture of innovation and digital
e) Supply Chain Management and Procurement: adoption within the organization can be challenging.
Access to accurate and real-time production data Investments in change management initiatives,
allows for better demand forecasting, inventory employee training, and stakeholder engagement are
management, and supply chain optimization. necessary to ensure smooth transitions and maximize
Procurement management benefits from improved the success of Industry 4.0 initiatives.
visibility into material requirements, lead times, and g) Long-Term Sustainability: Industry 4.0 is not just
supplier performance, facilitating more informed about implementing specific technologies but also
purchasing decisions and reducing procurement costs. about building flexible, adaptable, and sustainable
f) Data Verification, Monitoring, and Reporting: IoT business models. Organizations need to invest in
sensors provide high-quality, reliable data that can be ongoing research and development, continuous
verified and validated for accuracy, ensuring the improvement initiatives, and strategic partnerships to
integrity of information used for decision-making. stay ahead of evolving technology trends and maintain
Real-time monitoring of key performance indicators competitiveness in the long term.
(KPIs) and production metrics allows for timely Addressing these investment challenges requires careful
identification of deviations from targets and prompt strategic planning, risk assessment, and alignment of
corrective action. Interactive dashboards and reporting technology investments with business objectives.
tools provide stakeholders with customizable views of Organizations may also consider exploring alternative
relevant data, enabling better-informed funding sources, such as government grants, venture
decision-making and performance tracking. capital, or strategic partnerships, to support their Industry
I-4.0 Transformation Challenges includes: 4.0 transformation initiatives.
Challenges in the transformation to Industry 4.0 can arise Human aspect includes:
due to various factors: The human aspect can indeed pose significant hurdles in
a) Initial Capital Investment: Implementing Industry 4.0 the transformation to Industry 4.0. Here’s how some of
technologies often requires significant upfront these factors can impact the transition:
investment in infrastructure, hardware, software, and Cultural Aspect: Resistance to change: Employees may be
personnel training. Many traditional industries may resistant to adopting new technologies and processes due
face challenges in allocating resources for these initial to fear of the unknown, comfort with the status quo, or
costs, especially if they have limited budgets or existing scepticism about the benefits of Industry 4.0.
investments tied up in legacy systems.

Traditional work culture: Organizations with entrenched Importance of i4.0 Transformation with ERP:
hierarchical structures and rigid work practices may
a) Data Integration: i4.0 technologies facilitate seamless
struggle to adapt to the collaborative, innovative culture
integration of data from various sources into ERP,
required for successful digital transformation.
including production data from sensors, maintenance
Generation Gap: Generation differences: There may be data from equipment, and utilities consumption
generational differences in attitudes and comfort levels metrics. This integrated data repository provides a
with technology adoption, with younger employees more comprehensive view of operations, enabling better
open to change and older employees more resistant. coordination and resource allocation.
Skills gap: Older employees may lack the digital skills and b) Data Verification: Advanced analytics and AI
literacy needed to effectively use new technologies, leading algorithms integrated with ERP ensure the accuracy
to frustration and resistance to change. and reliability of data collected from sensors, digital
Change Acceptance: Fear of the unknown: Employees may meters, and AI cameras. Real-time data verification
feel anxious or apprehensive about the implications of Industry mechanisms identify anomalies, errors, or
4.0 on their roles, job security, and future career prospects. inconsistencies, ensuring data integrity and reliability
Lack of understanding: Miscommunication or inadequate for decision-making.
education about the reasons for and benefits of digital c) Monitoring and Reporting: i4.0 transformation
transformation can lead to misconceptions and resistance enhances monitoring and reporting capabilities within
among employees. ERP by providing real-time visibility into production
Fear of Job Loss: processes, equipment performance, and resource
utilization. Dashboards and analytics tools offer
Automation anxiety: Employees may fear that the
actionable insights, enabling proactive management
adoption of robotics, AI, and automation technologies will
of production workflows, maintenance schedules, and
lead to job displacement or redundancy, particularly for
utilities consumption.
repetitive or manual tasks.
d) Production Efficiency: By leveraging i4.0 technologies
Need for retraining: Employees may feel overwhelmed by
integrated with ERP, organizations can optimize
the prospect of reskilling or upskilling to adapt to new roles
production processes, minimize downtime, and reduce
and responsibilities in the digitalized workplace.
waste. Predictive maintenance algorithms identify
Addressing these human aspects effectively is crucial for potential equipment failures before they occur, while
overcoming resistance and fostering a supportive AI-driven analytics optimize production schedules and
environment for Industry 4.0 transformation: resource allocation, leading to improved efficiency and
Communication and Education: Organizations should cost savings.
communicate transparently about the reasons for digital e) Resource Optimization: i4.0 transformation enables
transformation, the benefits it will bring, and how it will organizations to optimize resource utilization by
impact employees' roles and responsibilities. Providing monitoring and analysing utilities consumption and
education and training programs to enhance digital literacy wastage issues. Real-time data on energy usage, water
and skills can help alleviate fears and build confidence. consumption, and material wastage facilitate informed
Inclusive Decision-Making: Involving employees at all decision-making to minimize resource inefficiencies
levels in the decision-making process and soliciting their and environmental impact.
input and feedback can increase buy-in and ownership of Conclusion
the transformation initiatives.
The journey to Industry 4.0 demands attention to tech,
Change Management: Implementing robust change
organization, and people factors. Embracing advanced tech
management strategies that address employees' concerns,
boosts efficiency and competitiveness, but success
provide support and resources for adaptation, and
depends on embracing change. Overcoming cultural
celebrate successes can help minimize resistance and
barriers, bridging gaps, and managing fears are vital.
facilitate a smooth transition to Industry 4.0.
Involving employees, providing education, and fostering a
Career Development and Job Security: Offering supportive culture are key. Combining Industry 4.0 with ERP
opportunities for career development, upskilling, and offers a potent platform for operational excellence and
reskilling can reassure employees about their prospects sustainable growth by integrating sensors, AI, and other
within the organization. Emphasizing the role of technology tech for improved efficiency and competitiveness.
as a complement to human capabilities rather than a threat
About the Author: The writer is a Fellow member of ICMA as well as
to job security can also help alleviate fears. Pakistan Institute of Public Finance Accountants (PIPFA). Currently, he
By proactively addressing these human aspects and is working as a Finance Manager at Abu Dhabi National Paper Mills in
fostering a culture of openness, collaboration, and U.A.E. He has extensive exposure to accounting, finance, costing,
continuous learning, organizations can overcome hurdles budgeting and business management. He is a principal contributor to
and maximize the success of their Industry 4.0 several successful start-ups, restructuring and turnaround projects,
acquisition and wind down in multi manufacturing industries.
transformation initiatives.

SECTOR BRIEF S B
Sector Brief & SWOT Analysis of

Health Sector in Pakistan
By ICMA Research and Publications Department
Historical Background  In 2016, the Government of Pakistan pledged to

Since Pakistan's independence in 1947, constructing a augment the health sector allocation to 3% by
endorsing the National Health Vision of Pakistan
healthcare system was a pressing challenge due to a
2016-2025.
shortage of medical facilities and professionals. Despite this,
the government acknowledged healthcare's significance Health Sector Overview
and initiated reforms. A pivotal step was establishing the  WHO data reveals Pakistan's Public sector health care
Pakistan Medical Council to oversee medical education and infrastructure having 1,201 hospitals, 5,518 basic
practice. Initially founded in 1948 under the British Indian health units, 683 rural health centers, 5,802
Medical Council Act 1933, it underwent reorganization in dispensaries with 123,394 beds available.
1951 under the Pakistan Medical Council Act. The formation  Private health sector addresses rising healthcare
of the West Pakistan Medical Council in 1957 and demand with limited public facilities, Pakistan now has
subsequent restructuring under the Pakistan Medical 529 private hospitals, over 70% health consultations
Council Ordinance 1962 led to the establishment of the occur in private sector with 90% first-level clinics.
present-day Pakistan Medical and Dental Council (PMDC),  UNDP reports show Pakistan's stagnant Human
which absorbed all provincial councils. Development Index (HDI) ranking at 161st globally
 In 1947-48, Pakistan established its healthcare system from 2019-2021, highlighting lower investment in
with 1,014 facilities, including 292 hospitals and few human development than its neighbors.
doctors with Mayo Hospital as the Pakistan's oldest and  SDG 3 aims to "Ensure healthy lives and promote
largest hospital. well-being for all at all ages," necessitating 16% of
 In 1957, Rawalpindi General Hospital [now Benazir Pakistan's GDP annually, with a financing gap of
Bhutto Hospital] became the inaugural tertiary hospital US$3.72 billion for 2020-2030.
serving Rawalpindi and Islamabad.  In FY2023, healthcare receives only 2.1% of GDP
 Until the early 1970s, local governing bodies managed resulting in deteriorating facilities. Despite health's role
health services. By then, a decentralized system in economic development, making this sector a priority
emerged, with basic health units offering primary care remains low in Pakistan.
to 6,000-10,000 people.  In FY2023, Public Sector Development Programme
 In the 1970s, the government laid the foundation for (PSDP) allocated Rs. 22,356.5 million for health,
the public healthcare system by establishing Basic comprising 2.8% of the total development budget and
Health Units (BHUs) with one in every union council by 0.05% of GDP.
1985-86.  Pakistan's 11th Five-Year Plan (2013-2018) that is
 In 1978, Expanded Program on Immunization (EPI) was currently being implemented addresses Vision 2025's
launched. pillars, aiming to save lives, eradicate diseases, and
improve healthcare access.
 In the late 1980s, there was a significant rise in private
clinics and hospitals.  Pakistan's Digital Health market anticipates significant
growth by 2024, with projected revenue reaching a
 In 1992, Pakistan initiated its first health management substantial US$401.40 million.
information system and collaborated on the Social
Action Programme Project.  Political unrest disrupts policy continuity, affecting
Pakistan's healthcare. Prioritizing health regardless of
 Japanese Official Development Assistance (ODA) regime changes is crucial for national progress.
began in Pakistan in 1954 and by 2015 cumulative loan
 Pakistan ranks 4th globally in type 2 diabetes burden,
and grant aid amounted to 9.9 million yen and 2.6
with over 19 million cases, impacting mortality,
million yen, with focus on human security, social
healthcare costs, and economic productivity.
infrastructure, and regional development.

S B
Province Wise Budget Alloca ons for Health Sector Province Wise Budget Alloca ons for Health Sector
199.7
S. # Provinces 2021 2022 2023 Amount in Rs. billion
142
1 Punjab Rs. 33.7 billion Rs. 130.1 billion Rs 15.8 billion 130.1
2 Sindh Rs 28.9 billion Rs 199.7 billion Rs 23.3 billion
3 Balochistan Rs 7.1 billion Rs 44.6 billion Rs 12 billion 33.7

44.6
28.9 23.3
15.8 12 8.3 17
4 Khyber Pakhtunkhwa Rs 8.3 billion Rs 142 billion Rs 17 billion 7.1 2.2 0.05 1.2
Punjab Sindh Balochistan Khyber Pakhtunkhwa Gilgit-Bal stan
5 Gilgit-Baltistan Rs. 2.2 billion Rs 0.05 billion Rs 1.2 billion 2021 2022 2023
SWOT
Source: Pakistan Economic Survey
analysis
of Health Sector in Pakistan
Strengths Weaknesses
 National Health Vision 2025 by MONHSR&C aims for better  Management change disrupts health policy implementation.
health facilities.  Lack of private sector regulation
 Provision of improved healthcare services  Ineffective and inefficient governance
 Public awareness and community support programs
 Lack of proper infrastructure for public health units.
 Potential growth of Pakistan’s Digital health market.
 Lack of research and development capacity in health sector.
 Huge growth potential of pharmaceutical and surgical industry.
 Medicine shortages and rising costs exacerbates health
 Health card introduction marks significant healthcare progress.
sector woes.
 Increase collaboration with international organizations
 Physical accessibility and lack of resources in health facilities
 Decreased the reliance on donors’ funding
 Lack of Health System Governance
 Multi-Sectoral Committee Initiatives at provincial level to
enhance health and climate resilience.  Lack of proper health diagnostic facilities and medical education
 Advances in medical technology  Lack of accountability hampers decision-making authority.

 Increasing efforts to address maternal and child health issues  Load shedding and electrical surges
Opportunities Threats
 Provinces must boost public health financing, restructure  Serious underfunding of the health sector
facilities through policies.  Shortage of hospitals, doctors, nurses, paramedics persists.
 Compliance with HR policy under 18th Amendment, to ensure
 Numerous issues of malnutrition and stunting persist in rural
capacity for drug regulation.
areas of Pakistan.
 Introduction of Family medicine to prevent
non-communicable diseases.  Pakistan is undergoing deepening human development crisis
 Increasing healthcare awareness among the population.  Insufficient training in medical equipment usage and underutili-
 Investment in Healthcare sector promotes medical tourism zation of primary health facilities persist.
boosting foreign exchange earnings.  Environment deterioration harms livelihoods, climate change
 Establishment of pharmaceutical park to improve availability of threatens health sector.
life saving medicines.
 Unavailability or non-functioning of medical equipment.
 Establishment of Disease response and surveillance system.
 Restructuring of public facilities  Devolution of power causing irregularities in safety standards.
 Reformed hospitals through decentralization  Lack of patient safety at different levels.
 Increase in health revenue allocations  Poor collaboration in health departments regarding data sharing.
 Increased insurance coverage  Massive brain drains of healthcare professionals
 Transparently governed, technically sound federal drug
 Large population lacks financial protection for healthcare.
regulatory authority.

Other Features ECONOMY
O THER FEATURES
WATCH
By ICMA Research and Publica ons Department
SIFC's Strategic Policy Initiatives to

Enhance Investment in Pakistan
On 20 June 2023, the Government of Pakistan approved the
FDI Inflows in Pakistan (Million US$)
establishment of the Special Investment Facilitation Council
(SIFC), a facility to act as a "single window" to facilitate investors,
Feb-24 131.2
establish cooperation among all Government departments,
and fast-track project development. -173.2
Jan-24
The SIFC is structured into three levels, with a six-member Apex
Committee led by the Prime Minister. The Executive Dec-23 211.1
Committee consists of eight members, including
representatives from the Pakistan Army. The Implementation Nov-23 131.4
Committee includes five members from both civilian and
military leadership. Additionally, the team comprises co-opted -200 -150 -100 -50 0 50 100 150 200 250
members such as the Secretary of Finance, Secretary of the

Board of Investment, Secretary of Economic Affairs Division Sector-wise FDI Inflows in Pakistan
(EAD), Chairman of the Federal Board of Revenue (FBR), Deputy Nov 23 Dec 23 Jan 24 Feb 24
Governor, and Provincial focal points. Power 92 100.6 68.8 64.3
Oil & Gas Explora ons 11.6 49.2 5.2 16.9
The SIFC will prioritize investment and privatization, focusing Financial Business 22.1 22.8 20.8 20.9
initially on five sectors: Agriculture & Livestock, IT & Telecom, Electronics 1.8 1.8 15.5 8.7
Mines & Minerals, Energy [Petroleum & Power] and Industry, Petroleum Refining 7.4 7.4 7.4 7.4
Source: SBP
Tourism and Privatization.
Sector-wise Foreign Direct Investment-Inflow in
In this Article, we will provide brief details on the strategic Pakistan (in Million US$)
policy initiatives that have so far been taken by SIFC to boost
investments in the above five priority sectors. Before that,
we will have an overview of the current status of FDI inflows
into Pakistan. Power Oil & Gas Financial Electronics Petroleum
Current status of FDI inflows Explora ons Business Refining
According to the State Bank of Pakistan, Foreign Direct 23-Nov 23-Dec 24-Jan 24-Feb
Investment (FDI) in Pakistan decreased by 25% from 2022 to
2023. From July to June 2023, the country received US$1.456
billion in FDI, US$480 million less than the US$1.936 billion in SIFC's Strategic Initiatives
2022. FDI fell by 58% to US$114 million in June 2023. At the core of SIFC's strategy is the creation of a favorable
However, during the first four months of FY2023-24 environment for foreign investors. This includes simplifying
(July-October), Pakistan received US$524.7 million in FDI, a regulatory processes, minimizing bureaucratic hurdles, and
7.11% increase from the same period the previous year. China, offering appealing incentives to attract investment. By
Norway, and the USA were the main sources of FDI, with fostering a business-friendly ecosystem, SIFC seeks to instill
investments directed towards power, oil and gas, financial confidence in investors and demonstrate Pakistan's
services, and electronics. commitment to their success.
SIFC in Pakistan has implemented strategic initiatives to boost
The financial sector was the top recipient of FDI, followed by the
foreign investment. These include launching the Pak Startup
chemicals and construction sectors. Pakistan continues to
Fund, introducing the National Seed Policy, establishing
experience fluctuating FDI figures, with US$131.2 million in E-Rozgar centers, revising visa policies, and launching the
February 2024 after a drop of US$173.2 million in January. The National Space Policy. Additionally, SIFC has standardized ROW
highest FDI was in December 2023 at US$211.1 million. charges, commenced the rollout of 5G, appointed an
Investment Ombudsman, and developed a Telecom
FOREIGN DIRECT INVESTMENT (FDI) IN PAKISTAN (Million US$)
Infrastructure Sharing Framework. Other measures include
Nov 23 Dec 23 Jan 24 Feb 24
operationalizing EXIM Bank, initiating the Green Corporate
FDI Inflows 131.4 211.1 -173.2 131.2 Initiative, and providing IT financial incentives.
Source: SBP

OTHER FEATURES
Pakistan has also engaged in regional economic partnerships, for investor rights and tax concessions. The Fiscal
emphasized human resource development, and launched the Incentives for Thar Coalfield offer special economic zone
Land Information and Management System (LIMS). Ongoing status, zero customs duties on machinery imports, and a
projects include Thar railway connectivity, infrastructure 30-year exemption on withholding tax on dividends,
development for Reko Diq, and establishing the National Seed among other benefits. The Income Tax Ordinance, 2001,
Authority. provides a 2% tax credit for every 50 employees in certain
a) Simplifying Investment Procedures and Removing sectors, encouraging employment.
Hurdles - SIFC aims to attract US$100 billion in FDI and h) Energy (Petroleum & Power) - SIFC offers a range of
achieve a nominal GDP of US$1 trillion by 2035. To achieve incentives in the energy (petroleum & power) sector which
this, the council is simplifying and expediting investment include tax exemptions, import concessions on machinery,
procedures, removing bureaucratic hurdles, and providing a 100% foreign ownership, government guarantees for
streamlined process for investors and business groups. payment obligations, protection against expropriation,
b) Addressing Challenges and Promoting Growth - SIFC is and attractive return on equity terms. SIFC provides tariff
actively addressing issues such as political instability, indexation, repatriation of capital and profits, and a
inconsistent economic policies, and bureaucratic obstacles streamlined dispute resolution mechanism. The Oil
that have historically deterred foreign investment in Refining Policy 2023 offers income tax exemptions, custom
Pakistan. By tackling these challenges, SIFC is creating a duty exemptions, and tariff protection for oil refinery
more conducive environment for investment and projects, aiming to boost local production and reduce
economic growth. imports in the energy sector.
c) Development of Special Economic Zones - One of the i) Industry, Tourism & Privatization - SIFC offers various
flagship initiatives spearheaded by SIFC is the progress of incentives to investors, including minimal capital flow
Special Economic Zones (SEZs) across Pakistan. These restrictions, 100% foreign equity allowance, and a reduced
designated zones offer a host of incentives, including tax customs duty of 5% on Plant, Machinery, and Equipment
breaks, streamlined customs procedures, and (PME) in manufacturing sector. The government also
infrastructure support, making them attractive provides tax relief of 25% on PME, with no limitations on
destinations for foreign investors. By focusing resources on royalty and technical fee payments. The Auto Industry
infrastructure development within these zones, SIFC aims Development & Export Policy (AIDEP 2021-26) encourages
to address critical bottlenecks and provide investors with a compact vehicles and new technologies for export markets.
ready-made platform to set up operations. The non-manufacturing sector (infrastructure & social) also
d) Agricultural Sector Development - In the agricultural benefits from similar incentives, including 100% foreign
sector, SIFC's initiatives have been instrumental in equity allowance, 0% customs duty on PME, and a 25% tax
attracting investments, promoting modern practices, and relief on PME. The tourism sector offers reduced duty on
driving sustainable development. SIFC has introduced imports, sales tax exemptions in Gwadar, loss set-off for
initiatives such as Land Information and Management hotel companies, tourist visa on arrival, and business visa on
System, Center of Excellence (LIMS-CoE), and the Green arrival. Export finance for consultancy services, income tax
Pakistan Initiative (GPI) to enhance productivity, transform exemption for hotel services, and tariff protection for oil
barren land into fertile ground, and promote sustainable refining projects are also available. The Oil Refining Policy
farming practices. 2023 offers income tax exemptions, custom duty
exemptions, and tariff protection for refineries, aiming to
e) Transforming CPEC and Driving Economic Growth -
boost local production and reduce imports.
SIFC's role in streamlining investment processes, policy
advocacy, security enhancement, transparency, equitable Conclusion
development, private sector engagement, and Pakistan's efforts to attract foreign direct investment (FDI) have
international collaboration is crucial for unlocking the full been mixed, though recent trends point toward potential
potential of CPEC and the agricultural sector. These improvement. While the country enjoys a large young
strategic initiatives are expected to transform CPEC into a population and a strategic position on the Belt and Road
driving force for Pakistan’s economic growth and Initiative (BRI) trade route, political instability, security issues,
development. and a fluctuating regulatory landscape have historically
f) IT & Telecom Development - For the development IT and deterred foreign investors.
telecom sector, SIFC offers tax incentives like profit The Special Investment Facilitation Council (SIFC) plays a
repatriation, foreign ownership up to 100%, and reduced leading role in stimulating FDI by removing bureaucratic and
income tax rates. Special Technology Zones provide tax infrastructure obstacles, ensuring smooth investment in
exemptions, import relief, and property tax exemptions. Pakistan and focusing on economic growth. SIFC's
Telecom operators seek reductions in advance income tax comprehensive approach includes streamlining investment
and federal excise duty to encourage investment and processes, establishing Special Economic Zones (SEZs),
growth. promoting investment in priority sectors, and enhancing
g) Mines & Minerals Development - SIFC offers various investor support.
incentives for investment in the mines and minerals sector, Pakistan's success in attracting FDI now hinges on sustaining
including concessional customs duty and sales tax rates for these positive changes. Consistent policy implementation,
the import of machinery, up to 100% foreign equity, addressing security concerns, and improving physical
expatriate facilitation, and Export Processing Zone infrastructure are crucial. By leveraging its potential and
incentives. CPEC also presents strategic advantages for creating a welcoming environment for foreign investors,
investment. Additionally, the Foreign Private Investment Pakistan can usher in a new era of economic expansion,
(Promotion and Protection) Act, 2022, provides protection technological advancement, and job creation.

OTHER FEATURES
Economy News
IMF and Pakistan Reach Staff-Level Agreement on Final Bailout Review
The International Monetary Fund (IMF) has reached a acknowledges strong program implementation by the
staff-level agreement with Pakistan on the final review of State Bank of Pakistan and the caretaker government in
a $3 billion bailout package, where Pakistan will receive recent months, as well as the new government's
$1.1 billion after approval from the Fund’s Executive intentions for ongoing policy and reform efforts. This
Board. The funds represent the final tranche of a $3 aims to transition Pakistan from stabilization to a robust
billion rescue package secured last summer, which and sustainable recovery. The review is expected to be
prevented a sovereign debt default. The agreement considered by the IMF's Board in late April 2024.
IMF Projects Fiscal Gap to Widen to 7.4% of GDP

The International Monetary Fund (IMF) forecasts that gradual decline in debt-to-GDP ratios is anticipated. The
Pakistan's fiscal deficit will expand to 7.4% of GDP for IMF expects the fiscal deficit to decrease over the
the current fiscal year, surpassing the government's medium term.
target of 6.5%. Despite stagnant tax-to-GDP ratios, a
UN projects over 2% GDP growth rate in Pakistan

The United Nations (UN) has projected accelerated Commission for Asia and the Pacific (UN-ESCAP)
economic growth, and reduction in inflation by more predicted real GDP growth of 2% and 2.3% in the current
than half in Pakistan, in line with similar predictions and next fiscal years, respectively. The survey cites
made recently by the World Bank and other political unrest and floods as challenges and
international financial institutions about the country. emphasizes the need for improved tax policies,
The 2024 Economic and Social Survey of Asia and the governance, and long-term financing to bridge
Pacific region, released by the UN Economic and Social development gaps.
Workers’ Remittances recorded an inflow of $3 billionin March 2024

According to State Bank of Pakistan, in March 24 the the first nine months of FY24, showing a 0.9% increase
Workers' Remittances reached $3 billion, marking a 31.3% compared to the same period in FY23. Major inflows
monthly and 16.4% yearly growth. Totaling $21 billion in came from Saudi Arabia, UAE, UK, and USA.
Pakistan's Foreign Loan Inflows Low at $9.5 Billion

Pakistan received just under $9.5 billion in foreign loans program. Finance Minister Aurangzeb is seeking more
in the first eight months of FY2024, facing challenges in support from the ADB and the World Bank as the
obtaining new funding from key multilateral lenders like government aims to bridge funding gaps through
the World Bank and the Asian Development Bank (ADB). various channels.
Disbursements have been slow despite an existing IMF
Pakistan Witnesses 8% Year-on-Year drop in Power Generation
In March 2024, Pakistan's power generation fell by 8.2% generation for the past nine months declined by 1.2%
compared to the previous year, mainly due to reduced year-on-year. The rise in generation costs was driven
output from RLNG, coal, and gas. Monthly generation, largely by local coal expenses. Hydel was the top power
however, rose by 12.5% thanks to better hydel, nuclear, source, followed by nuclear and RLNG.
and RLNG generation. Despite this, cumulative
NEPRA Approves Rs. 2.7492 per Unit Increase in Electricity Tariffs for FY 2023-24
NEPRA has approved a Rs. 2.7492 per unit increase in three months. NEPRA is also considering a possible
electricity tariffs for FY2023-24, impacting consumers Rs. 4.99 per unit increase due to falling electricity
with a total cost of Rs. 85.2 billion. The adjustment will consumption and rising costs.
start in April 2024, excluding lifeline consumers, over

Other Features
OTHER FEATURES
REGULATORY
WATCH
By ICMA Research and Publica ons Department
Monetary Policy Committee (MPC) decided to keep the policy rate unchanged at 22%
The State Bank of Pakistan's Monetary Policy Committee macroeconomic stability, and monetary aggregates are
(MPC) has kept the policy rate at 22%, citing a gradual stabilizing, aiding a positive inflation outlook. The MPC
decrease in inflation but noting ongoing high levels and highlighted the importance of ongoing efforts to lower
risks. Economic activity is slowly improving, supported inflation expectations and decided to maintain the
by agriculture, while the external current account deficit current monetary policy stance.
has significantly shrunk. Fiscal consolidation supports
SECP amends Securities Brokers (Licensing and Operations) Regulations

The Securities and Exchange Commission of Pakistan marking it as the first fully Shariah-compliant brokerage
(SECP) has approved amendments in the Securities house. It is anticipated that the new regulations will
Brokers (Licensing and Operations) Regulations, 2016 for streamline entry process for new entrants in the
facilitating Shariah-compliant brokerage services for the brokerage industry and facilitate existing brokers
securities market of Pakistan. The SECP has granted a desiring to offer Islamic Financial Services.
license to ZLK Islamic Financial Services (Private) Limited,
SECP notifies amendments to Corporate Restructuring Companies Rules, 2019

The Securities and Exchange Commission of Pakistan managing nonperforming assets (NPA) from distressed
(SECP) has amended the Corporate Restructuring financial institutions. The changes facilitate trust
Companies Rules, 2019, aligning them with the establishment, liquidation procedures, and Corporate
Corporate Restructuring Companies Act, 2021. The Restructuring Board functions, enhancing CRC
amendments aim to support Corporate Restructuring operational efficiency and investor compensation.
Companies (CRCs), specialized in acquiring and
SECP Strengthens Corporate Governance with Focus on Sustainability and Diversity

SECP proposes amendments to Listed Companies DE&I, including gender equality in leadership and
Regulations to enhance Boards' focus on ESG and gender workforce. Amendments mandate regular ESG review
equality. Boards will drive sustainability strategies, and may establish dedicated sustainability committees,
aligning with ESG Disclosure Guidelines. They'll promote fostering long-term value and competitiveness.
SBP Reviews Pakistan's Advancements in Digital Payments

The State Bank of Pakistan (SBP) released its Quarterly transactions. Raast and PRISM systems played key roles
Payment Systems Review for Q2 FY2023-24, highlighting in facilitating millions of transactions worth trillions of
notable progress in digital payments. Mobile and PKR. Pakistan's payments infrastructure involves banks,
Internet Banking have grown, reaching 16 million and 11 microfinance banks, payment system operators/
million users, respectively. E-wallet registrations surged, providers, and FinTechs.
and digital transactions made up 82% of retail
FBR Achieves Monthly and 9-Month Targets Amid Unprecedented Refunds

As the third quarter of FY2023-2024 came to a close, the collection compared to the corresponding period of the
FBR has collected Rs. 6,710 billion, surpassing the previous fiscal year. In March 2024, the FBR met the
assigned target of Rs. 6,707 billion for the first nine assigned target of Rs. 879 billion, with refunds totaling
months. Refunds totaling Rs. 369 billion were disbursed, Rs. 67 billion, a notable increase from Rs. 22 billion issued
compared to Rs. 254 billion in the same period last year. in March 2023.
The FBR maintains a consistent 30% growth in revenue

OTHER FEATURES
Management
Accounting Terms
Attention-directing The function of managerial accounting information in pointing out to managers issues
function that need their attention.
Budgeted statement of A budget schedule providing information about the expected sources and uses of cash for operating
cash flow activities, investing activities, and financing activities during a particular period of time.
Continuous
A system where a manufacturer assumes the inventory management function for the retailer.
replenishment
Drum-Buffer-Rope The TOC inventory management system that relies on the drum beat of the major
(DBR) System constrained resources, time buffers, and ropes to determine inventory levels.
Equivalent units of Complete units that could have been produced given the total amount of manufacturing
output effort expended during the period.
Feasible set of solutions The collection of all feasible solutions.
Goods that can be stored before sale, such as durable goods, mining products, and some
Inventorially goods agricultural products.
Loose constraints Constraints whose limited resources are not fully used a product mix.
Myopic behavior Managerial actions that improve budgetary performance in the short run at the expense of
the long-run welfare of the organization.
Overhead cost A report showing the actual and flexible-budget cost levels for each overhead item, together
performance report with variable-overhead spending and efficiency variances and fixed-overhead budget variances.
Partial productivity
A ratio that measures productive efficiency for one input.
measurement
Quality standards The quantity of input allowed per unit of output.
The complete book on Glossary of Management Accoun ng Terms is available on link: h ps://www.icmap.com.pk/News_Pdf/Final_Glossy.pdf

NATIONAL COUNCIL
Office-bearers
President Vice President Honorary Secretary Honorary Treasurer
Shehzad Ahmed Malik, FCMA Ather Saleem, FCMA Shaham Ahmed, FCMA Awais Yasin, FCMA
Chief Executive Officer Member Tribunal, Anti-Dumping Staff General Manager Finance Company Secretary
Shehzad Malik Management Government of Pakistan Pak Suzuki Motor Co. Ltd. Diamer Basha Development
Consultants (Pvt) Ltd. Company (WAPDA)
Members
Zia ul Mustafa Awan, FCMA Anis-Ur-Rehman, FCMA Khawaja Ehrar Ul Hassan, FCMA Khalid Mehmood, FCMA
President Director Advisory Services, Executive Vice President Chief Financial Officer
House of Professionals Government of Pakistan Chief Compliance Officer NBP Fund Management Ltd.
Naveed Zafar Ashfaq Jaffery & Summit Bank
Company, Karachi
Government Nominees
Saleemullah Sumaira K. Aslam Abdul Rehman Warraich Muhammad Kamran

Deputy Governor Chief Financial Analyst/ Commissioner, Shahzad, ACMA
State Bank of Pakistan Deputy Chief Cost Accounts Officer, Securities and Exchange Deputy Chief Cost Accounts Officer,
Finance Division, Govt. of Pakistan Commission of Pakistan Finance Division, Govt. of Pakistan
Execu ve Director
Aamir Ijaz Khan, FCMA

New Joiners of Upcoming
National Council (2024-26)
Ghulam Mustafa (F-931) Abdul Qayyum (F-986) Muhammad Yasin (F-1464)
Intzar Hussain (F-1939) Marryum Pervaiz (F-2000) Azeem Hussain Siddiqui (F-2217)

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2

From the Desk of Chief Editor

13 Corporate Leaders of ICMA Articles Section

68 of Health Sector in Pakistan

May-Jun Modernizing Agriculture DISCLAIMER: The Chartered Management

/icmapak /icmapdotpk /company/icmap

Shehzad Ahmed Malik, FCMA

2 ICMA’s Chartered Management Accountant, Mar-Apr 2024

I am delighted to present the March-April 2024 edition of the Chartered

Additionally, our Research & Publications Department has crafted a

This issue underscores our commitment to fostering meaningful discussions

Ather Saleem, FCMA

ICMA’s Chartered Management Accountant, Mar-Apr 2024 3

Dr. Salman Masood Muhammad Muhammad

4 ICMA’s Chartered Management Accountant, Mar-Apr 2024

Ms. Esther Perez Ruiz

“ Pakistan needs to significantly mobilize

ICMA’s Chartered Management Accountant, Mar-Apr 2024 5

policy to lower inflation while also ensuring a flexible

6 ICMA’s Chartered Management Accountant, Mar-Apr 2024

inefficiency of this sector and improve the quality of

ICMA’s Chartered Management Accountant, Mar-Apr 2024 7

Mr. Atif Ikram Sheikh

“ To fix the recurrent economic crisis,

effectively navigated away from IMF

8 ICMA’s Chartered Management Accountant, Mar-Apr 2024 5

ICMA: How is FPCCI addressing the impact of rising

ICMA’s Chartered Management Accountant, Mar-Apr 2024 5

Business community and FPCCI support the

10 ICMA’s Chartered Management Accountant, Mar-Apr 2024 5

Dr. Hafiz A. Pasha

“ The current IMF program is

ICMA’s Chartered Management Accountant, Mar-Apr 2024 11

changes will have to be made in the level and

12 ICMA’s Chartered Management Accountant, Mar-Apr 2024

Muhammad Rafique [F-1313]

Asim Mirza [F-2278]

ICMA’s Chartered Management Accountant, Mar-Apr 2024 13

IMF, Political Will, And Declining

S ocial media is flooded with glamorous footage of an

ICMA’s Chartered Management Accountant, Mar-Apr 2024 14

But this all comes packaged in stringent parameters

fiscal discipline and monetary stability through sound

“ My recently found assurance

have played into indigenous strengths, used technology 50

of 240 million employees challenged with basic literacy

16 ICMA’s Chartered Management Accountant, Mar-Apr 2024

IMF Partnership and

ICMA’s Chartered Management Accountant, Mar-Apr 2024 17

3) Unprecedented Shocks and Steps to be taken for Pakistan’s

Challenges and Reforms c) Market determined Exchange Rate

18 ICMA’s Chartered Management Accountant, Mar-Apr 2024

d) Maintaining Financial Stability Economic Risks for Pakistan

ICMA’s Chartered Management Accountant, Mar-Apr 2024 19

Pakistan under IMF Program:

20 ICMA’s Chartered Management Accountant, Mar-Apr 2024

40 vital to maintain import-restricting

ICMA’s Chartered Management Accountant, Mar-Apr 2024 21