# *Detailed SUMMARY of the article "An IMF-mandated balancing act" by Nasir Jamal, Published in Dawn on June 11th, 2025:* The article analyzes *Pakistan's budget* for the upcoming year, which struggles to balance the *IMF programme's* goal of *fiscal consolidation* with the government's desire to expand the economy at a moderate growth rate of *4.2%* — up from the three-year average of *1.65%* — without offering a credible roadmap for structural economic transformation. Many suspect that the *real estate sector* is the "backdoor" the authorities plan to use for providing economic growth impetus, with *tax relief* announced for the wealthy *real estate and construction lobby* believed to drive up the growth rate. This year's provisional *GDP growth* estimate of *2.7%* falls short of the original target of *3.2%*, though it aligns with *IMF* and other *multilateral lenders'* projections. Experts warn that the government risks pressuring its *external account* as *imports* are rising faster than *exports*. *Pakistan Business Council CEO Ehsan Malik* expresses dismay over the lack of meaningful measures to increase *industrial productivity* and *exports*. The budget disappoints those expecting deeper reforms for structural economic shift under the achieved economic stability from the *IMF programme*. Economist *Sajid Amin* describes it as focused on *fiscal stabilization* and *revenue generation* without long-term growth reform vision, essentially a routine budget preparing for the upcoming *second IMF review*. Economist *Ali Hasnain* agrees, noting the budget strengthens government finances through cuts in *development spending* and *subsidies* without structural improvements. *External sector* improvements stem from record *remittances* rather than increased *exports* and *foreign direct investment*. The government implements long-standing *tariff reforms* under *IMF conditions* to remove protections from some industries over five years and restricts *tax non-filers'* ability to purchase securities above thresholds, cars above *850cc*, or open bank accounts. It also phases out *sales tax exemptions* for industries in *FATA/PATA* over three years. The *Overseas Investors Chamber of Commerce and Industry (OICCI)*, representing over *200 foreign investors*, welcomes these measures but expresses disappointment over limited progress in addressing inequitable *corporate tax rates*. *OICCI* regrets the missed opportunity to broaden the *tax base* and document Pakistan's substantial *Rs9 trillion cash-based informal economy*. The organization notes the absence of meaningful *government expenditure* reductions that could narrow the *budget deficit*, emphasizing that *fiscal discipline* remains critical for *macroeconomic stability*. The article concludes that Pakistan needs transformative policies for sustainable economic growth, but this cannot be achieved through backdoor methods that previous governments have tried, always leading to worse economic crises. # *Easy/Short SUMMARY*: Pakistan's budget balances *IMF fiscal consolidation* goals with *4.2% growth* targets but lacks structural reforms. The government relies on *real estate tax relief* as a backdoor growth strategy while *GDP growth* of *2.7%* falls short of *3.2%* target. Experts warn of *current account* pressure as *imports* outpace *exports*. The budget focuses on *revenue generation* without long-term vision, implementing *IMF-mandated tariff reforms* and restricting *tax non-filers*. *OICCI* welcomes measures but criticizes limited progress on *corporate tax* equity and missed opportunities to document the *Rs9 trillion informal economy*. Pakistan needs transformative policies, not backdoor solutions that historically worsen economic crises. # *SOLUTIONS of The Problem*: ## *1. Implement Structural Reforms* Focus on comprehensive *tax structure overhaul* and *industrial productivity* improvements rather than cosmetic changes. ## *2. Broaden Tax Base* Document the *Rs9 trillion informal economy* through digitization and incentive schemes for voluntary compliance. ## *3. Boost Export Competitiveness* Invest in *export-oriented industries* and remove barriers to increase *foreign direct investment*. ## *4. Rationalize Government Expenditure* Cut unnecessary *government spending* and reduce *subsidies* to narrow the *budget deficit*. ## *5. Equalize Corporate Tax Rates* Address inequitable *corporate taxation* to enhance Pakistan's competitiveness and attract *foreign investment*. ## *6. Strengthen Industrial Base* Focus on *manufacturing sector* development instead of relying on *real estate* as growth driver. ## *7. Improve Current Account Balance* Implement policies to control *import growth* while boosting *export earnings* and *remittances*. ## *8. Phase Out Protectionist Policies* Gradually remove *tariff protections* to create competitive industries and level playing fields. ## *9. Enhance Revenue Collection* Strengthen *tax administration* and reduce exemptions to increase government revenues sustainably. ## *10. Develop Long-term Growth Strategy* Create a comprehensive economic roadmap beyond *IMF programme* requirements for sustainable development. # *IMPORTANT Facts and Figures Given in the article*: - Target *GDP growth rate* of *4.2%* compared to three-year average of *1.65%*. - Provisional *GDP growth* estimate of *2.7%* falls short of original *3.2%* target. - *OICCI* represents more than *200 foreign investors* operating in Pakistan. - Pakistan's *informal economy* worth *Rs9 trillion* operates on cash basis. - *Tax non-filers* restricted from buying cars above *850cc* and opening bank accounts. - *Sales tax exemptions* for *FATA/PATA* industries to be phased out over *three years*. - *Tariff reforms* to remove industry protections over *five years*. # *IMPORTANT Facts and Figures out of the article*: - Pakistan's *current account deficit* was *$3.4 billion* in *FY2024* (*State Bank of Pakistan*, 2024). - *Tax-to-GDP ratio* in Pakistan is *8.6%*, among lowest globally (*World Bank*, 2024). - *Foreign remittances* reached record *$30.25 billion* in *FY2024* (*SBP*, 2024). - Pakistan's *external debt* stands at *$130 billion* as of *March 2025* (*Finance Ministry*, 2025). - *Industrial sector* contributes only *19.4%* to GDP (*Pakistan Bureau of Statistics*, 2024). - *Exports* declined *3.2%* to *$27.5 billion* in *FY2024* (*Trade Development Authority*, 2024). # *MCQs from the Article*: ### 1. *What is Pakistan's target GDP growth rate mentioned in the budget?* A. 3.2% *B. 4.2%* C. 2.7% D. 1.65% ### 2. *Which sector is suspected to be the "backdoor" for economic growth?* A. Manufacturing *B. Real estate* C. Agriculture D. Services ### 3. *What is the value of Pakistan's cash-based informal economy?* A. Rs7 trillion *B. Rs9 trillion* C. Rs11 trillion D. Rs5 trillion ### 4. *Over how many years will tariff reforms remove industry protections?* A. Three years *B. Five years* C. Seven years D. Ten years ### 5. *How many foreign investors does OICCI represent?* A. 150 *B. More than 200* C. 300 D. 250 # *VOCABULARY*: 1. *Fiscal consolidation* (مالی استحکام) – Government effort to reduce budget deficits 2. *Provisional* (عارضی) – Temporary or preliminary 3. *Multilateral* (کثیر جانبدار) – Involving multiple parties or countries 4. *Impetus* (محرک) – Driving force or stimulus 5. *Dismay* (مایوسی) – Disappointment or distress 6. *Stabilisation* (استحکام) – Process of making something stable 7. *Revoke* (منسوخ کرنا) – To cancel or withdraw 8. *Threshold* (حد) – Minimum level or amount 9. *Exemptions* (چھوٹ) – Freedom from obligation or liability 10. *Inequitable* (غیر منصفانہ) – Unfair or unjust 11. *Overhaul* (اصلاح) – Complete examination and repair 12. *Competitiveness* (مسابقتی صلاحیت) – Ability to compete effectively 13. *Devoid* (خالی) – Completely lacking or empty of 14. *Formalisation* (رسمی بنانا) – Making something official or structured 15. *Rationalisation* (عقلی بنانا) – Making more logical or efficient 16. *Macroeconomic* (کل اقتصادی) – Relating to large-scale economic factors 17. *Transformative* (تبدیلی لانے والا) – Causing major change 18. *Sustainable* (پائیدار) – Able to be maintained long-term 19. *Provisional* (عارضی) – Temporary or subject to change 20. *Credible* (قابل اعتماد) – Believable or trustworthy 📢 *Attention Please!* We appreciate your commitment to acquiring knowledge through our summaries. 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Click the link below to join now 🔗 [Dawn Article Summaries](https://cssmcqs.com/dawn-editorials-articles-summary-for-students-pdf-download/) *WhatsApp Channel Link*: [https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y](https://whatsapp.com/channel/0029Va7tT3o35fLnJeFbpS2y) --- *www.dawn.com* *Analysis: An IMF-mandated balancing act* *Nasir Jamal* *5–6 minutes* NEXT year's budget struggles to balance the IMF programme's goal of fiscal consolidation with its desire to expand the economy at a moderate growth rate of 4.2 per cent — from the three-year average of 1.65pc — without offering a credible roadmap for a longstanding structural shift. Many suspect that the real estate sector is the "backdoor the authorities plan to use for providing some impetus to economic growth". The tax relief announced for the wealthy real estate and construction lobby is believed to be meant to drive up the growth rate. This year's provisional GDP growth estimate of 2.7pc falls short of the original target of 3.2pc, though it remains in line with the projection of the IMF and other multilateral lenders. Many, however, suspect that the government will not be able to meet its target without putting pressure on its external account, as imports are rising at a much faster pace than exports. "By pushing growth, the government risks bringing significant pressures on its current account," Pakistan Business Council Chief Executive Officer Ehsan Malik insists, expressing his dismay over lack of any meaningful measures in the budget to increase industrial productivity and exports. The budget has proved to be a major disappointment for those who thought the economic stability achieved under the IMF programme would guide the government to implement deeper reforms for a structural shift in the economy and lay the foundation for sustainable growth in future. If anything, according to economist Sajid Amin, the budget is all about fiscal stabilisation and revenue generation and lacks in long-term growth reform vision. "It's a routine budget that hopes to prepare the ground for the success of the upcoming second review of the IMF programme," he argues. Economist Ali Hasnain agrees. The budget aims to strengthen the financial position of the government, through cuts in developing spending and subsidies, without any structural improvement, he maintains. "Similarly, the external sector improvements owe to record increase in remittances (rather than increase in exports and foreign direct investment). At best, it is a cautious step in the right direction, even if they don't have a plan." The absence of credible effort to implement reforms, especially to broaden the base of taxes, apart, the government sets off in motion the long-standing tariff reforms — again under the IMF loan conditions — to revoke protections to some industries over the next five years and seeks to restrict ability of tax non-filers to purchase securities above a threshold and cars above 850cc or opening bank accounts. Moreover, it lays the ground for phased removal of sales tax exemptions for industries (steel, edible oil & ghee, etc) operating in Fata/Pata in three years to make the playing field even across the country. These are indeed welcome measures, said the Overseas Investors Chamber of Commerce and Industry (OICCI) in its reaction to the budget. Yet the organisation representing more than 200 foreign investors operating in the country expressed its deep disappointment over the limited progress in addressing inequitable corporate tax rates. "There is an urgent need for a comprehensive overhaul of tax structures to enhance Pakistan's competitiveness attracts foreign investment," it said, regretting that the government has missed the opportunity to broaden the tax base in the next budget, which is devoid of any concrete strategy to document Pakistan's substantial Rs9tr cash-based informal economy — a critical measure for meaningful revenue enhancement and economic formalisation. The OICCI also noted the absence of meaningful reductions in government expenditure, which could have helped narrow the budget deficit. "Fiscal discipline remains critical to ensuring macroeconomic stability, and OICCI urges the government to prioritise expenditure rationalisation in its budgetary measures." Pakistan badly needs transformative policies to turn around the economy and out it on a sustainable path to growth. But that cannot be achieved by using the backdoors. Previous governments have tried that path and always led the country to a worse crisis than before. Published in Dawn, June 11th, 2025