KARACHI: Mian Zahid Hussain, representing several prominent business organizations, stated today that the domestic economy is showing signs of recovery, but cautioned that the ongoing International Monetary Fund (IMF) review mission must avoid imposing further energy tariff hikes or tax burdens. Such measures, he warned, could lead to a collapse of the fragile export sector.
According to Pakistan Businessmen and Intellectuals Forum, Mian Zahid Hussain acknowledged the positive macroeconomic indicators, noting a 5% growth in Large-Scale Manufacturing in the first half of FY26. He pointed to a 67.2% increase in automobile production and an 11.6% rebound in cement, indicating robust domestic demand. He also praised the Pakistan Stock Exchange for its transition to the T+1 settlement cycle, which aligns with global standards despite a recent index correction.
"We have achieved a fragile macro-stabilization, but it operates on a two-track reality," Hussain stated, highlighting a severe competitiveness emergency in the export sector, with textile exports declining by 7.13% year-on-year in January. He emphasized the need for the government to convey to the IMF that overtaxing could hinder recovery efforts.
Hussain warned of the traditional pressure from the IMF mission to increase tax revenues and energy tariffs. He argued that the export sector cannot absorb additional "hidden taxes," noting that energy costs in Pakistan are 40% higher than in regional competitors due to cross-subsidies in industrial power bills.
He further highlighted the threat from the India-EU Free Trade Agreement, which jeopardizes Pakistan's GSP Plus advantage and a $9 billion European export market. Hussain expressed concerns that maintaining the 10.5% interest rate or enforcing rigid Super Tax collections could price Pakistani exporters out of the global market.
However, he welcomed the government's structural trade reforms, particularly the Export Development Fund (EDF) Act 2026, which includes private-sector exporters in its governance. He stressed the need for the government to negotiate fiscal relief with the IMF to utilize these funds effectively.
Hussain concluded by urging the Finance Minister and the economic team to advocate for a shift in focus toward lowering business costs to protect the country's export base.
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