ISLAMABAD: The International Monetary Fund (IMF) has urged Pakistan to broaden its tax base, improve governance and invest more in human development, saying the country must move beyond economic stabilisation and pursue deeper reforms to achieve sustainable growth.
Speaking at the 29th Sustainable Development Conference organised by the Sustainable Development Policy Institute (SDPI), IMF Pakistan representative Dr Mahir Binici said the country needed a broader, simpler, fairer and more predictable taxation system to generate resources for education, healthcare, infrastructure and investment, reported by The Express Tribune.
He acknowledged Pakistan’s efforts to maintain economic stability over the past two to three years despite domestic difficulties, climate related disasters and international uncertainty. However, he warned that stabilisation alone would not guarantee lasting economic progress.
“Pakistan has already done the hard work,” Binici said, stressing that the next priority should be higher investment, increased economic activity, stronger exports and better employment opportunities.
He identified five major areas requiring attention, including macroeconomic stability, fiscal discipline, revenue mobilisation, improved governance and investment in human capital.
On taxation, Binici said Pakistan needed to raise its revenue collection to around 15 per cent of GDP, a level he described as an important threshold for emerging economies to maintain an effective state and provide essential public services. Pakistan, he noted, remained well below that benchmark.
He argued that tax collection should not simply be about increasing government revenue but about creating the financial capacity to improve public services and people’s living standards.
The IMF representative also called for reforms in the energy sector, national tariff policy and business environment, saying better governance was an economic necessity rather than merely an administrative matter.
Investment in education and healthcare, he added, was equally important. Although spending in these sectors had gradually increased from around two per cent of GDP, Pakistan still lagged behind comparable countries. The government aimed to raise the figure to between 2.8 and 3 per cent of GDP in the current fiscal year.
However, the IMF’s repeated demands for structural reforms have raised questions about Pakistan’s progress in implementing its commitments. Despite promises, repeated assurances and deadline setting, the release of a $1.2 billion tranche has also remained pending for nearly two years, highlighting the continuing uncertainty surrounding financial commitments and programme implementation.
The Fund has repeatedly criticised Pakistan’s narrow tax base, weak revenue administration, delays in reforming state owned enterprises and lack of transparency in public finances.
IMF Regional Director Jihad Azour recently called for a fairer and more neutral tax system, arguing that a transparent taxation structure would encourage compliance, support productive businesses and reduce informality.
Yet, progress remains limited. By October 15, only 137 new retailers had joined the government’s traders’ tax scheme, against an annual target of one million. Influential sectors, including agriculture, retail and real estate, have also continued to contribute less than their potential.
For Pakistan, the challenge is therefore twofold: convincing citizens and businesses that taxation can be fair while demonstrating that economic reforms will produce tangible improvements in their lives.
The IMF’s message is clear: economic stability may provide a foundation, but only consistent reforms, productive investment and stronger institutions can turn that foundation into lasting prosperity.
