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Express Tribune
4 days ago
- Business
- Express Tribune
PIDE plans to boost farmer gains
'When our costs are Rs3,400, how can we sell for cheaper? The policies punish us for surviving,' Khokhar said. photo: file The Pakistan Institute of Development Economics (PIDE) has released a game-changing policy blueprint titled "Towards a Free Market: A Blueprint for Wheat Sector Deregulation," authored by Dr Muhammad Faisal Ali and Dr Sobia Rose. Published as policy viewpoint, the document calls for the full and structured deregulation of Pakistan's wheat sector, arguing that the long-standing MSP policy has failed to stabilise markets, protect farmers, or ensure consumer welfare. Instead, it has led to unintended consequencesbenefiting large landholders, flour millers, and middlemenwhile accumulating a circular debt of Rs680 billion in Punjab by 2023, said a statement issued in Islamabad on Sunday
Business Recorder
31-07-2025
- Business
- Business Recorder
Analysts see major economic gains in Pakistan's trade deal with US
In a key development on the economic front, Pakistan and the United States have finalised a landmark agreement that not only promises to reduce tariffs on Pakistani exports but also paves the way for the development of Pakistan's untapped oil reserves. The move, being hailed by analysts as a strategic win for Islamabad, is expected to unlock wide-ranging benefits across trade, energy, and technology sectors. 'We have just concluded a Deal with the Country of Pakistan, whereby Pakistan and the United States will work together on developing their massive Oil Reserves,' US President Donald Trump wrote on social media on Wednesday. 'We are in the process of choosing the Oil Company that will lead this Partnership.' Reacting to the development, Pakistan's Finance Minister Muhammad Aurangzeb, in a video message on Thursday, termed the trade deal a 'win-win' situation for both countries. 'We have come a long way in terms of our overall strategic partnership between Pakistan and the United States,' he said. The agreement arrives just weeks before the expiration of a 90-day suspension on a proposed 29% tariff Trump had announced in April, which threatened to dent Pakistan's export revenues. According to Sana Tawfik, Head of Research at Arif Habib Limited, the deal will slash the tariff rate to an expected range of 15-20%, significantly mitigating potential export losses. 'If the 29% tariff was imposed, Pakistan could have faced losses to the tune of $1.1-1.4 billion in export revenue annually,' Tawfik told Business Recorder, citing data from the Pakistan Institute of Development Economics (PIDE). 'The deal will help minimise this loss,' she said. US total goods trade with Pakistan was an estimated $7.3 billion in 2024, according to the website of the Office of the US Trade Representative, up from around $6.9 billion in 2023. The US goods trade deficit with Pakistan was $3 billion in 2024, a 5.2% increase over 2023. Meanwhile, experts have termed the agreement a strategic and economic milestone. 'Very good development, beneficial for the country and industry,' said Samiullah Tariq, Head of Research at Pak-Kuwait Investment. Saad Hanif, Head of Research at Ismail Iqbal Securities, praised the move as a bold diplomatic achievement. 'Pakistan has hit two birds with one stone, striking oil and securing trade relief in one bold diplomatic move,' he said. Terming the agreement a significant step forward in strengthening bilateral economic ties, Saad said that Pakistan is expected to benefit from reduced tariffs on its exports to the US, helping safeguard its market access and boosting trade competitiveness. 'A major highlight of the deal is the US commitment to assist in the development of Pakistan's oil reserves, signalling a strong vote of confidence in the country's energy potential,' he said. 'Both nations have agreed to enhance cooperation across key sectors such as IT, digital infrastructure, mining, and cryptocurrency, paving the way for increased investment and technological collaboration.' Saad said that the agreement not only reinforces Pakistan's strategic importance in the region but also reflects growing economic alignment with the US, especially at a time when Washington is reevaluating trade relations with other South Asian economies. 'We are expecting broader economic implications through this deal — especially in sectors like energy, minerals (including Reko Diq), and agriculture,' added Tawfik.
Business Recorder
26-07-2025
- Business
- Business Recorder
PIDE holds seminar: Country's macro-economic indicators show signs of improvement
ISLAMABAD: Economists at a seminar while highlighting key economic challenges of Pakistan have said that the country's macroeconomic indicators have shown signs of improvement, such as declining inflation which is below five percent and a recent upgradation of credit rating by S&P from CCC+ to B-. Speaking at an event organised by Pakistan Institute of Development Economics (PIDE) here on Friday, they, however, emphasised the need to transition from mere stabilisation to robust growth to benefit the common people. The event brought together senior officials from the Ministry of Planning, Development and Special Initiatives, researchers, and economists to engage in a rigorous policy discussion. Speaking on the occasion, Dr Haider Ali explained that the seminar aimed to deliberate on aligning short-term macroeconomic stabilisation efforts with long-term sustainable growth strategies under the URAAN Pakistan framework. URAAN Pakistan is a strategic initiative by the Planning Commission built on the '5Es': Exports, E-Pakistan (digitalization), Environment, Energy, and Equity. Dr Khurram Ejaz presented a comprehensive overview of the current economic context and proposed strategies to move towards a stable growth path under URAAN Pakistan. He noted that Pakistan's economy has faced a multitude of external and internal shocks, including post-pandemic disruptions, the Russia-Ukraine conflict, and the devastating 2022 floods. These factors pushed the country toward fiscal and balance-of-payment crises, culminating in the signing of an Extended Fund Facility (EFF) with the IMF in September 2024. The IMF programme emphasised restoring macroeconomic stability through fiscal tightening, monetary policy, and external sector stabilisation. While it succeeded in curbing inflation and modestly reviving growth estimated at 2.7 percent, it limited the fiscal space for development spending capped at 2.6 percent of GDP. Dr Ejaz contrasted this with the ambitious targets of URAAN Pakistan, which envisions 6 percent GDP growth by 2029 with significantly higher employment generation. He acknowledged a critical financing gap between what is possible under the IMF framework and what URAAN Pakistan aspires to achieve. He proposed following five initial strategies to bridge this gap: (i) repositioning Development Finance Institutions (DFIs) to fulfill their core mandate rather than investing in low-risk securities; (ii) migrating suitable PSDP projects to Public-Private Partnership (PPP) mode to crowd in private capital; (iii) issuing diaspora, green, and SDG-linked bonds to unlock innovative financing; (iv) devolving social sector expenditures to provinces in a phased manner, and (v) reducing losses from state-owned enterprises (SOEs) and monetising non-strategic public assets such as ports under a structured asset recycling programme. Dr Nasir Iqbal questioned the underlying assumption that low growth is due to limited PSDP spending and argued that productivity, export orientation, and youth engagement are more critical to sustained growth than merely increasing public investment. He recommended establishing village-level economic zones, leveraging idle public infrastructure, and simplifying business registration to boost local entrepreneurship. Dr Karim Khan emphasized that IMF programmes and growth are not inherently contradictory and that sustainable growth must be private sector-led. He urged leveraging CPEC Phase-II and capitalising on productive investment avenues. Dr Shujaat Farooq added that governance reform and performance-based budgeting are crucial. He highlighted a disconnect between planning and finance ministries and stressed the need to engage provinces, whose PSDPs now exceed the federal government's in size. Dr Muhammad Zeshan noted the inefficiencies within PSDP allocations and tariff structures that perpetuate rent-seeking and protect low-productivity sectors. He advocated enabling emerging industries such as halal meat exports, seafood, and IT, and preparing for the Fourth Industrial Revolution through digitization, cloud infrastructure, and robotics. Shaaf Najib questioned the long-term impact of PSDP spending, citing studies that showed limited sustainability. He called for improving PSDP efficiency, prioritizing completed projects, and redirecting funds toward sectors with higher fiscal multipliers. Dr Mehmood Khalid appreciated the absence of tax rhetoric in the presentation but criticised the lack of growth diagnostics and the absence of evidence from existing research. He emphasised grounding all strategies within the URAAN Pakistan 5Es and aligning projections with realistic economic modeling. Dr Iftikhar echoed these sentiments, warning against public investment that crowds out private sector liquidity and highlighting inconsistencies in SEZ policies, HEC funding, and NFC allocations. Copyright Business Recorder, 2025
Business Recorder
24-07-2025
- Business
- Business Recorder
Development 2.0: the case for PPPs in Pakistan
Over the past few years, policymakers and academics have shown renewed interest in Public-Private Partnerships (PPPs) as a way of addressing fiscal limitations and speeding up infrastructure construction and the provision of increased yet sustainable public services. Similar to other developing nations, according to Dr Shamshad Akhtar, who was former finance minister of Pakistan, Pakistan will be facing an estimated USD 124 billion infrastructure financing gap by 2040, along with public debt nearing 66.3% of GDP and is projected to rise to 71.4 percent in FY2025, making traditional government-led-financed development increasingly unsustainable. These gaps have forced government to explore other forms of financing vehicles like PPPs to facilitate funding of desirable public infrastructure development using money raised from the private sector. However, PPPs have largely been promoted only as an alternative mode of financing whereas they might actually be an enabling tool to deliver greater efficiencies, innovation and value for money-normally referred in Pakistan as a game changer. The prime minister, Shehbaz Sharif, has recognised the successful implementation of PSDP under the leadership and oversight of the federal minister for planning, development and special initiatives, Professor Ahsan Iqbal. He gave this credit due to the fact that PSDP is being strategically used for ensuring development of much-needed infrastructure but also serving to provide a clear vision of development priorities and growth path of the country. It is commendable, however this should be supplemented or complemented in the PSDP with addition of new models of financing for PPP that will extend the frontiers of fiscal efficiency even more, crowd in additional private funding and lead to institutional reform. A detailed report of 2023 published by the Pakistan Institute of Development Economics (PIDE), Reforming the Federal Public Sector Development Programme, presented a strong case of an urgent reform was established. The report promoted a portfolio cleaning strategy, which advised a reduction of the size of PSDP by 20 to 25 percent and the removal of almost half of all projects underway in this regard. The study indicated that many of such projects are either not backed by institutions or have become low-priority schemes that involve subjecting of the national funds on them without receiving a corresponding reward. PSDP resources are often spread thin over too many unviable projects, thus limiting impact and leading to cost and time overruns. Now this lack of efficiency has crippled the argument in favor of seeking alternative forms of developmental financing only. Beyond financing, frame-work has to be energized and implemented quickly. The greatest of them is the Public-Private Partnership (PPP) model that provides a practical and performance-oriented system of project delivery. PPPs, by utilising the privately raised funds, technical excellence, and creativity can aid Pakistan to make important infrastructure, enhance social amenities, even bring in Foreign Direct Investment as a complement and decrease the pressure on the exchequer. The federal government, to its credit, has achieved certain success in institutionalizing the PPP model with the setting up of the Public-Private Partnership Authority (P3A) across provinces and federal government. Since its inception, P3A has developed a project pipeline of PKR 2.5 trillion. Its priorities however are limited to federal infrastructure projects such as roads, bridges and transportation corridors. To make PPPs a real pillar of the national development, the model has to develop both vertically and horizontally, expanding to provinces and sectors like education, health, and housing as well. Sindh's PPP-based Education Node where private firms operate public schools has shown success in underserved areas. The mixed model has produced the following positive results such as better administration, provision, and education achievement, especially in underdeveloped and remote regions. The Sindh experience shows that when well-designed PPPs are implemented with transparency and accountability they result in marked improvement in the quality of public service delivery. Similarly, even in Pakistan, thought leaders have been promoting a paradigm shift for public investment. One of the notable economists and Vice Chancellor of PIDE Dr Nadeem Javaid has stressed on how Pakistan should no longer focus at using public money as a crutch, but should instead reinvent PPPs as a means of managing risks, corporate efficiency, and innovation. He suggested radical reforms: such as the use of inflation-linked bonds, blended finance, and revenue-sharing arrangements so that PPPs could be scaled up and made more marketable. More importantly, he pointed out to the necessity of institutional reforms and better governance in order to have sustainable ecosystem of the collaboration of the private sector. This is what is also embedded in the URAAN Pakistan transformation plan. Around the world, countries like the UK, India, Brazil, and Chile have used PPPs to bridge public service gaps most effectively. The Private Finance Initiative in the UK has been quite revolutionary in the modernisation of hospitals and transport schemes, whereas in Chile there has been a larger access to clean water due to the water and sanitation PPPs. These success stories emphasize that PPPs are not mere financial tools, they are development tools that can transform service delivery and governance. In addition to infrastructure, the scope of PPPs to revolutionize service delivery in the sectors of human development is huge. As it has been reported in Housing Finance Pakistan Report, 2024, Pakistan requires developing 2 million housing units annually to accommodate its growth requirements, which is a situation that cannot be achieved without the involvement of the private sector. PPPs can also help expand healthcare access, digital platforms, and affordable housing. Whether these projects can succeed or not will however be based on the capacity of the government to design transparent contracts, establish accountability and earn the confidence of the people. It is also a change that needs the redefinition of the role of the state. The government should stop acting as the only financier and project implementer but an enabler-designing the rules, tracking the performance, and achieving the results. It has to develop the capacity of PPP design and management, simplify the procedures of procurement, and integrate transparency throughout the project cycle. Procurement procedures need to be sanitized and made corruption free. This matter is most important, particularly after Pakistan has been ranked 135th out of 180 countries by the Transparency International Corruption Perceptions Index One of the priorities, in this case, should be to decentralize the PPP system into the provinces and local governments. Local governments are in a position to determine contextual demands and have a project that deals with shortages of public services at the community level. The establishment of facilitating legal and regulatory framework of subnational PPPs, coupled with technical assistance and even financial de-risking, will do a lot to stimulating development at the grassroots. The government of Pakistan needs to wade through its development problems with insufficient resources and a huge scope of the problem. Although the PSDP is important, it cannot be used as the single point through which infrastructure and service delivery aspiration is realized in the country. A gap, where vision and performance split, can be narrowed with the help of Public-Private Partnerships provided that they were well thought of and clearly performed. The time to institutionalize PPPs is now — anything less risks repeating past inefficiencies. (Dr Ahmad Fraz is Assistant Professor and Dr Mahmood Khalid is Senior Research Economist at the Pakistan Institute of Development Economics (PIDE)) Copyright Business Recorder, 2025
Business Recorder
09-07-2025
- Business
- Business Recorder
Nationwide poverty explosion: PIDE challenges widely circulated narrative
ISLAMABAD: The Pakistan Institute of Development Economics (PIDE), while debunking the claims regarding a sharp increase in poverty in the country has clarified the situation, saying the rise in poverty statistics is primarily due to global metric recalibration rather than a sudden economic collapse. The Economic Think Tank with its latest report titled, 'The Poverty Illusion: When Numbers Distort Reality' has challenged the widely circulated narrative of a nationwide poverty explosion. The report, authored by Dr Nasir Iqbal, PIDE's registrar and associate professor, critically examines the World Bank's revised global poverty lines. The new $4.20 per day threshold, replacing the previous $3.20, has led to an increase in poverty statistics from 39.8 percent to 44.7percent. However, Dr Iqbal points out that more than 80percent of this increase is the result of shifting global poverty benchmarks, not a collapse in household conditions. Inflation and other factors account for just 18percent of the increase. As per the report, the extreme poverty, measured at $3 per day, has soared from 4.9 percent to 16.5 percent. The sharp uptick in poverty rates is largely the result of the World Bank's upward revision of global poverty lines. For lower-middle-income countries like Pakistan, the general poverty threshold has been increased from $3.20 to $4.20 per day. Likewise, the extreme poverty line has been revised upward from $2.15 to $3 per day. These changes represent a substantial recalibration of the baseline used to assess poverty. When the bar is raised, more people fall below it — not because their lives have deteriorated, but because the measurement standard has shifted. Dr Nadeem Javaid, vice chancellor (VC) of PIDE and member of the Planning Commission of Pakistan, stated, 'Policymaking must be grounded in facts, not fear. These revised figures reflect changes in how poverty is measured globally, not a dramatic decline in the livelihoods of Pakistanis.' Key insights from PIDE's analysis include the strength of the informal economy, which supports over 60 percent of Pakistan's workforce, absorbing economic shocks and offering resilience during crises. Social protection programmes such as the Ehsaas Programme and the Benazir Income Support Program (BISP) have played significant roles in mitigating poverty. Additionally, remittances from overseas Pakistanis continue to provide vital support, cushioning households and bolstering the economy during times of distress. Even amid major economic shocks such as the COVID-19 pandemic and the 2022 floods, PIDE estimates the poverty rate in 2025 to be between 23 percent and 25 percent, with food-based poverty pegged at just 6.2 percent, signalling consistent, long-term improvement. In light of these findings, PIDE has proposed a series of actions to address poverty with a data-driven approach. These include reinstating the Household Integrated Economic Survey (HIES) to update data, refining BISP to link cash transfers with measurable outcomes like education, employment, and asset growth, and developing a National Poverty Reduction Strategy integrated with the Sustainable Development Goals (SDGs) to ensure inclusive economic reforms. Additionally, PIDE calls for leveraging the informal economy through the creation of Village Economic Zones (VEZs) to boost rural employment and productivity via local value chains and agri-tech innovations. The VC PIDE emphasised, 'This is not a time for panic, but for rational, evidence-based policymaking that can turn perceived crises into opportunities for structural economic reform.' Copyright Business Recorder, 2025
