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Think tank Report: Urgent Reforms Needed for Pakistan’s Economic Stability


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In its latest quarterly assessment report, PRIME Plus, the Islamabad-based think tank Policy Research Institute of Market Economy (PRIME) emphasizes the critical need for regulatory, structural, and public sector reform to ensure Pakistan’s economic stability. The report acknowledges the current government’s efforts to maintain stability, with support from friendly nations and the International Monetary Fund (IMF) expected to sustain the country through the election season and the period leading to the appointment of the new government. This article explores the key recommendations put forth by PRIME, aiming to shed light on potential solutions to improve macroeconomic indicators and foster sustainable growth.


Emphasizing Fiscal Discipline and Expenditure Cuts

PRIME commends the government’s decision to incorporate expenditure cuts into the budget based on the IMF’s recommendations. This strategic move has enabled the budget to achieve a primary surplus, indicating fiscal discipline. Moreover, the government’s initiative to decouple pensions from the budget is expected to alleviate financial pressure and enhance budgetary efficiency.


Addressing Taxation Challenges

While PRIME acknowledges the government’s efforts to raise taxes on salaried individuals, businesses, and companies, it raises concerns about the potential drawbacks of imposing higher taxes on the existing tax base. The report suggests that excessive taxation may discourage compliance and dissuade potential new tax filers from participating in the tax system. To broaden the tax base effectively, PRIME recommends exploring alternative strategies for minimizing tax liabilities, thus striking a balance between revenue generation and taxpayer incentives.


Streamlining Taxation Policies

The complexity of the current budget, particularly the introduction of numerous new tax exemptions while retaining some previous ones, has caught the attention of PRIME. The think tank highlights the importance of streamlining taxation policies to create a more transparent and straightforward system. By simplifying tax regulations, the government can foster a conducive environment for businesses and individuals alike, encouraging compliance and efficient revenue collection.


Addressing Challenges in Tax Enforcement

PRIME raises concerns about potential challenges in tax enforcement, which could result in increased costs and inefficiencies during the collections process. To overcome these obstacles, the think tank suggests enhancing tax enforcement mechanisms and investing in technology-driven solutions for a more robust and effective tax collection system.


Fostering Privatization and Foreign Direct Investment (FDI)

PRIME’s report predicts a sidelining of the privatization agenda and expresses skepticism about State-Owned Enterprises (SOE) reform over the next 12 months. Despite the government’s interest in privatization post-election, PRIME indicates limited feasibility in the short run concerning foreign direct investment. To attract foreign investors and stimulate economic growth, the report advises the government to address potential barriers and offer incentives that promote investment.



The PRIME Plus report provides valuable insights into the current economic landscape of Pakistan and outlines essential recommendations for fostering sustained growth and stability. By prioritizing fiscal discipline, streamlining taxation policies, and addressing challenges in tax enforcement, the government can take significant strides towards economic prosperity.

Moreover, facilitating privatization and promoting foreign direct investment will create a more investor-friendly environment, unlocking new opportunities for growth and development. Implementing these recommendations requires a collaborative effort between the government, businesses, and other stakeholders, setting the stage for a promising future for Pakistan’s economy.

Abu Bakr Alvi
Abu Bakr Alvi
Mr. Abu Bakr Alvi, Senior Journalist Based in Faisalabad

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