Classical conditioning of taxpayers, especially of businesspersons, has begun with preponed budget discussions. A robust economic scenario has been illustrated and now all sectors are being told to contribute to exports no matter how much. Finance Minister Muhammad Aurangzeb’s call in this regard is both bold and somewhat impractical, given the absence of incentives or support systems to make this happen.

During an interaction with businesspersons in Khyber Pakhtunkhwa, the minister urged the private sector to lead the country’s exports. Assurances regarding low interest rates and first loss guarantees sound promising. However, high taxation and soaring energy tariffs might serve as deterrents when it comes to passing on relief to consumers.

Despite these challenges, the economic stability achieved over the past few months is commendable. The Finance Ministry is also overly optimistic in its Monthly Economic Update and Outlook report for February 2025. Inflation, interest rate, and fiscal deficit have all declined significantly, while the surge in exports, remittances, foreign direct investment, and foreign reserves are being celebrated as major achievements.

Given that Pakistan has remained a remittance-led economy despite years of efforts to boost exports, treating high remittances as a sign of economic growth is not prudent

Yet, portraying this stability ahead of the International Monetary Fund (IMF) mission’s visit next week feels off. The government seems more focused on ticking IMF boxes, putting the actual fixes on the backburner. Moreover, the actual reasons behind these positive changes have not been discussed that openly. Given that Pakistan has remained a remittance-led economy despite years of efforts to boost exports, treating high remittances as a sign of economic growth is not prudent. At the same time, foreign investment agreements are a positive development. However, the government must ensure that the FDI coming in is not merely distressed debt investment.

Rather than banking solely on FDI, local investors must be encouraged to chip in by ensuring they get a good return. Acknowledging corruption and bureaucratic red-tape as hurdles in the way of ease of doing business is also a welcome statement, and so is digitization of tax collection to minimize leakages. These steps are likely to produce positive results when coupled with incentives for investors.

Although some friendly countries have rolled over a huge portion of external debt, the amount payable is still there and has to be returned next year. Firefighting with IMF loans could work only for so long. The bailouts always come with strings attached, and the country might get further entangled in them unless this cycle is broken. Boosting exports is perhaps the only way out of the economic mess, and both the government and the business community must swallow the bitter pill – giving up short-term gains for long-term stability.