Pakistan needs to strengthen its resilience to external shocks by improving energy efficiency, expanding exports, diversifying foreign exchange sources, and maintaining sound fiscal management, Lucia Real Martin, global executive director of the Association of Chartered Certified Accountants (ACCA), has said. "Energy prices matter particularly strongly for Pakistan because they feed into transport, production, household costs, and, ultimately, the balance of payments," Martin said.
The immediate policy challenge is to keep inflation expectations anchored while protecting the conditions for productive investment, she said. The State Bank of Pakistan (SBP) has kept its policy rate at 11.5 per cent, reflecting the continuing importance of managing inflation risks, she added.
However, the longer-term solution goes beyond interest rates. Pakistan needs a more efficient energy system, stronger export capacity, diversified sources of foreign exchange, sound fiscal management, and businesses better equipped to manage risk and volatility.
External shocks cannot be eliminated, but their economic impact can be reduced, Martin said. The objective should be to prevent temporary disruptions from repeatedly undermining investment, confidence, and the country's long-term growth prospects.
Asked about the key measures needed to improve the country's economic health, she said the priority was to preserve the macroeconomic stability achieved so far and use it to address structural constraints that have held back investment and productivity. The required response is a package of mutually reinforcing reforms rather than a single measure.
Pakistan needs a broader and more predictable revenue base, stronger public financial management, and better-targeted public expenditure. The business environment also requires greater policy consistency, faster and more transparent regulation, and stronger investor protection.
Competitiveness must improve through more reliable energy supplies, better infrastructure, digitalisation, and skills development. Reform credibility is particularly important.
Investors commit capital for the long term when they can trust institutions, rules, and information. Strong governance, credible reporting, and transparency are therefore essential to the infrastructure needed for economic growth.
On the challenges facing Pakistan after achieving a measure of economic stability, Martin said the country needed to convert stability into productive capacity through private-sector-led and export-oriented growth.