Former finance minister Dr. Hafeez Pasha has warned that the State Bank of Pakistan’s dollar buying from informal markets is not a sustainable solution. He said this policy, aimed at stabilising the rupee, hurts exporters and discourages economic growth. Exporters now face a heavy 29% tax under IMF terms, while countries like India and Bangladesh support their exporters with tax relief.
Dr. Pasha criticised the government’s economic policies, saying growth is unlikely to cross 2% this year—far below the 3.5% target. He pointed to poor performance in large-scale manufacturing and a sharp 28% fall in cotton production as major reasons for the slowdown. With first-quarter GDP at only 1%, per capita income continues to decline due to high population growth.
He added that 44% of the population now lives below the poverty line, while youth unemployment has reached a record high of 22%. Though inflation has eased, he questioned the accuracy of official data, especially claims of a 34% drop in wheat and 15% drop in fuel prices. Core inflation, however, still remains around 6% to 8%.
Dr. Pasha also noted weak foreign investment, with only $1.4 billion received despite high expectations after forming the Special Investment Facilitation Council (SIFC). He expressed concern over delays in privatising PIA and power companies, and warned that a tax collection shortfall of over Rs1,000 billion could hurt Pakistan’s IMF talks.