Quality growth
PAKISTAN’S persistently low GDP growth has bred impatience. Rising poverty, stubborn unemployment and compressed household demand have fuelled calls to exit the IMF programme or roll back its conditionalities. High taxes, an elevated policy rate and expensive energy are cited as evidence that stabilisation has come at the cost of growth. While the frustration is understandable, framing the debate as a choice between IMF discipline and economic recovery is misleading — and dangerous.
What Pakistan needs is not growth at any cost, nor relief measures that benefit a narrow segment of the elite, but quality growth: growth that creates jobs, raises incomes, strengthens exports and expands the tax base. Abandoning the IMF programme would not deliver this. It would simply repeat Pakistan’s cycle of premature stimulus, external account stress and abrupt adjustment — each time leaving the economy weaker and the poor worse off.
The IMF programme was never designed to deliver rapid growth in the short term. Its purpose is to restore macroeconomic stability — a precondition for sustainable expansion. Inflation has begun to ease, the external account has stabilised and fiscal slippages are being contained, albeit slowly. Walking away now without addressing the structural weaknesses that caused the crisis would forfeit these gains.
Equally flawed is the belief that growth can be revived by reversing reforms that reduce protection and privileges, particularly tariff rationalisation. Tariffs are not a development policy; they are a tax on consumers and exporters. Rolling them back would protect inefficiency, raise input costs and deepen inequality by transferring benefits from millions of consumers and exporters to a small group of producers. That is not inclusive growth; it is rent preservation.
The debate is about escaping the habits that made IMF inevitable.
Some arguments for exiting the IMF also rely on implausible assumptions about alternative sources of foreign exchange. Claims that potential orders for the JF-17 could replace IMF inflows confuse aspiration with arithmetic. Such orders would be episodic and their net foreign exchange impact far smaller than headline values suggest, given the high import content of aircraft production. Strategic value aside, they cannot substitute for macro financing.
If Pakistan is serious about inclusive growth, the focus must shift to employment-intensive, export-oriented activity. The core economic failure is not slow GDP growth alone, but the inability to absorb a rapidly expanding workforce. Strategies reliant on protected domestic markets, capital-intensive sectors or speculation will inevitably exclude most Pakistanis. Agriculture, export-oriented manufacturing, tourism, IT and other services could absorb millions.
Encouragingly, quality growth is possible even within the remainder of the IMF programme if policy choices are aligned with reform rather than resistance.
First, the tax burden must shift away from those already documented and compliant. High rates imposed on a narrow base discourage investment and encourage informality. The urgency to secure the IMF programme has compromised equitable distribution of the tax burden. This imbalance should be urgently addressed, particularly for exporters and salaried employees, and offset by reducing non-development expenditures.
Second, as a matter of priority, targeted relief must be given to export-oriented and labour-intensive sectors, financed through loss reduction, governance reform and rationalisation of capacity payments. Competitive energy pricing is an investment in jobs and foreign-exchange earnings.
Third, public spending must be re-prioritised. Growth driven by human capital — education, skills, hea-lth and nutrition — delivers far higher and more inclusive returns than untargeted subsidies or prestige projects.
Fourth, monetary credibility must be preserved. While interest rates can ease gradually as inflation subsides, premature loosening would reignite price pressures and erode real incomes. Price stability is essential for restoring confidence and investment.
Finally, the private sector must confront its own role. For decades, it has preferred protection and guaranteed margins over competitiveness. Demanding reform reversals while lamenting low growth is inconsistent. Export-led economies grow because firms invest in efficiency, scale and innovation — not because governments shield them indefinitely.
Pakistan’s challenge is not that the IMF programme makes growth impossible. It is that quality growth requires choices that are harder than quick fixes. Inclusive growth demands discipline, reform and a willingness — by government and business alike — to redirect resources away from privilege towards productivity.
The writer, a former CEO of Unilever Pakistan and the Pakistan Business Council, serves on the boards of several public companies.
Published in Dawn, January 20th, 2026
