Pakistan stuck in economic cycle due to governance flaws: Miftah Ismail

• Session regarding economy takes place at KLF.
• PM’s adviser calls for reforms at structural level.
• $12bn needed yearly to manage debt: ex-SBP chief.

Former finance minister Miftah Ismail has said that Pakistan remains trapped in an economic cycle due to structural governance issues.

Speaking during a session at the Karachi Literature Festival, the former finance minister stressed that eliminating terrorism is necessary to create an environment conducive to growth.

The session, titled “Fixing the Fundamentals: Pakistan’s Economic Reform”, brought together prominent policymakers, economists, and business leaders to discuss Pakistan’s economic challenges and the immediate need for structural reforms.

The discussion centered on moving beyond short-term fixes and adopting a consistent, long-term strategy to stabilise and grow the economy.

The session was moderated by Muhammad Azfar Ahsan, former minister for investment. The speakers included Muhammad Ali, Dr Ishrat Husain, Ismail, Asad Umar, and Dr Zeelaf Munir. They agreed that Pakistan’s economic problems cannot be resolved through temporary or tactical measures.

Adviser to the Prime Minister on Privatisation Ali emphasised that reform must begin at the structural level, particularly by documenting the economy to strengthen the taxation system. He stated that sustainable growth is not possible without proper economic documentation and tax reform.

He also called for reducing the government’s footprint in commercial activities, arguing that running businesses is not the government’s role and that state involvement contributes to high electricity and gas prices. He stressed the importance of expanding exports, increasing women’s participation in the workforce, and empowering local governments to improve service delivery and governance.

Economist, author, and former State Bank of Pakistan (SBP) Governor Dr Husain highlighted Pakistan’s external debt burden of $25 billion and noted that the country requires approximately $12 billion annually to manage its debt obligations.

According to him, Pakistan spends around $10 billion each year on food imports, a figure that could be significantly reduced by strengthening domestic agriculture. Providing farmers with targeted support, better access to credit, modern farming techniques, and improved supply chains would enhance food security, reduce pressure on foreign exchange reserves, and improve rural livelihoods.

Dr Husain also emphasised the need to reduce dependence on raw materials and imported goods by investing in industries such as steel, petrochemicals, pharmaceuticals, and lithium batteries, while shifting greater focus towards services and innovation-driven sectors.

Pakistan Business Council Chairperson Dr Munir stressed that credibility and policy consistency are necessary to attract investment.

She said that capital responds more to stability and predictable regulations than to short-term incentives. Pakistan, she noted, has experienced low growth for the past three decades due to structural misalignment and inconsistent policymaking.

Munir highlighted serious human development challenges, including women’s workforce participation of less than 20% and approximately 25 million children out of school. Rebuilding trust requires transparency, accountability, open debate, institutional reform, a broader tax base, improved governance, and long-term industrial planning.

Meanwhile, Miftah said that Pakistan remains trapped in an economic cycle due to structural governance issues and stressed that eliminating terrorism is necessary to create an environment conducive to growth.

He called for population control, ensuring that all children attend school, reforming the NFC Award, reducing government expenditures, and strengthening local governments. He argued that effective local governance would reduce the need to create smaller provinces.

He also emphasised the importance of privatising state-owned electricity distribution companies and gas utilities to improve efficiency and service delivery and criticised bureaucratic delays and excessive red tape and urged for accountability and timely reforms to restore public trust.

For his part, former finance minister Umar underscored the need to change Pakistan’s economic and industrial structure to align with the global demand. The country is not producing what the world currently needs, and no nation can achieve sustained growth without increasing exports, he said.

He emphasised reducing the government’s heavy footprint, promoting fair competition, implementing tax reforms, and ensuring policy continuity. He also called for long-term economic planning and highlighted the importance of democratic stability and regional trade in resetting the economy.

Muhammad Azfar Ahsan described reactive and short-term policymaking, or ad-hocism, as one of Pakistan’s most persistent challenges.

According to him, the country cannot be managed through temporary measures and personality-driven decisions. Instead, Pakistan needs a coherent, rules-based, and data-driven long-term economic policy built on institutional continuity.

The session concluded with a shared understanding that Pakistan’s economic revival depends on structural reform, policy consistency, institutional accountability, export growth, human development, and a clear long-term vision.

Sustainable progress will require difficult decisions, but the speakers agreed that transparency, trust, and strong governance are necessary to place the country on a stable path towards economic growth.