Former President of the Islamabad Chamber of Commerce and Industry, Shahid Rasheed Butt, warned on Wednesday that the government’s flawed strategies, particularly in the tax and energy sectors, are the primary reason for the downgrade in Pakistan’s economic forecast and the re-emergence of the current account deficit.
Former president of the Islamabad Chamber of Commerce and Industry, Shahid Rasheed Butt, has termed the downward revision of the growth forecast by the International Monetary Fund (IMF) and the reappearance of the current account deficit in December as clear symptoms of fundamental policy flaws.
According to Butt, flawed tax and energy policies are actively damaging the country’s economy by increasing operational costs and discouraging potential investment. He stressed that these measures have failed to create an environment conducive to sustainable economic expansion.
The exorbitant tariffs on electricity and gas are a major hindrance, especially for small and medium-sized enterprises (SMEs) that operate on slim profit margins. Consequently, many businesses are either reducing their output or moving into the undocumented sector, thereby limiting employment opportunities.
The primary reason for the deficit’s return was cited as an increase in imports, an imbalance exacerbated by the country’s sluggish export performance.
While remittances from abroad are providing substantial support to the economy, Butt warned that this reliance cannot substitute for the need for robust, export-led growth.
The business leader emphasized the urgent need for reforms in the tax and energy structures, which he described as burdensome for the public and detrimental to business competitiveness. He urged the government to prioritize simplifying the tax system and implementing meaningful reforms instead of temporary fixes to achieve stable economic growth and prevent recurring balance of payments crises.