EDITORIAL: Minister for Planning, Development and Special Initiatives Ahsan Iqbal announced the imposition of an “Export Emergency” in the country entailing the creation of a special cell in the Prime Minister’s Office to address problems and constraints facing the business community on an urgent basis with the objective of increasing exports by 40 percent in four years and 200 percent by 2035. His statement reflects an awareness of a decline in exports leading to a rise in the trade deficit during the first half of the current year against the same period the year before — negative USD 19,204 million as opposed to negative USD 14,271 million — which implies that the reliance on foreign borrowing, including rollovers from friendly countries, borrowing from bilaterals and multilaterals, to shore up foreign exchange reserves continues unabated. Awareness of a problem is the first step towards its resolution and requires sector experts/stakeholders to delve into the causes of the problem and formulate a set of remedial measures designed to resolve it in the short, medium and ideally long term. There is a plethora of empirical research gathering dust in government offices that highlights the reasons behind Pakistan’s cyclical economic volatility. The October 2024 International Monetary Fund (IMF) report titled Request for an Extended Fund Arrangement reiterated the crux of the problem notably “economic volatility has only increased over time, with a tight correlation between Pakistan’s boom-bust economic outcomes and its macroeconomic policies.” The report, disturbingly, added that “compared to nine other regional peers, the country’s export growth since 2000 has been second to last, with sales to the world particularly stagnant during the 2010s. The country’s trade restrictions (including exchange measures, tariff and non-tariff barriers, restrictions to payments, etc.) have placed it consistently at or around the 90th percentile of the highest Measurement of Aggregate Trade Restrictions index…. This high level of protection has not helped improve, and likely undermined, Pakistan’s competitiveness.” One can only hope that the export emergency cell would take cognizance of these observations and not repeat past mistakes which have been to extend monetary and fiscal subsidies to specific influential sectors with the objective of increasing exports, which would reactivate the boom-bust syndrome. While setting up an export emergency cell in the PM Office indicates that that the government has elevated it at the highest executive level, thereby facilitating appropriate policy decisions promptly, there is a need to carefully review the pledges made by the economic team leaders to the Fund — pledges that if not met may not only lead to a cessation of the next tranche release but as has been evident since 2019 may lead to the three friendly countries refusing to roll over 12 billion dollars to another year. The Fund’s advice is implicit in its observation: “with an export basket strongly biased towards agriculture and textiles, the country has struggled to reallocate resources towards more technologically complex products. Reallocation, however, is held back by existing microeconomic distortions, including public procurement of agricultural goods, price controls on raw inputs, and fiscal and financial incentives for low productivity sectors.” In other words, structural reforms are required that do not consist of monetary or fiscal incentives or setting up special economic zones, that the government has pledged to phase out and not announce any new ones but to end all existing economic distortions. If past precedence is anything to go by an ‘export emergency cell’ will undertake measures that would bring it in conflict with pledges made to the IMF. To increase our leverage with the Fund would require taking measures that would be supported by the Fund and include ending the energy cross-subsidy paid for by industry, reducing current expenditure to create fiscal space that would ease the vise-like application of the Federal Board of Revenue’s audit function being described as harassment by industry, end red tape implicit in any new venture and end the elite capture of both budgeted resources as well as outlay. Copyright Business Recorder, 2026