EDITORIAL: Deputy Prime Minister and Foreign Minister, formerly four-time Finance Minister Ishaq Dar while addressing the closing session of Pakistan Policy Dialogue stated that the ongoing USD 7 billion 36-month long Extended Fund Facility programme approved in October 2024 by the International Monetary Fund (IMF) Board is widely perceived as being anti-growth — an accurate perception based on the severely contractionary monetary and fiscal policies agreed with the Fund staff. His observation is spot on as was his subsequent comment that a 2.6 percent growth rate would effectively amount to zero or negative growth given that annual increase in the country’s annual population of 2.55 percent as per the 2023 Census data. The National Income Accounts for the first quarter of the current year approved by the 115th meeting of the National Accounts Committee (NAC) on 30 December 2025 estimated growth at 3.71 percent year-on-year, indicating a more than satisfactory upturn when compared to 1.56 percent recorded in the same period last fiscal year. This growth was on the back of increased industrial activity, large-scale manufacturing sector grew by 5.02 percent (July-October 2025) as opposed to negative 0.62 percent in the same period of 2024, which as per the NAC accounted for the uptick in growth. This particular claim has increasingly been challenged not only by the industrial community, which has been using its influence in the corridors of power to make inputs costs — including the discount rate, the energy charges, the taxes and the inordinate delay in refunds — comparable to those prevalent in our regional competitors to forestall the sustained decline in exports as well as providing incentives for enhanced smuggling across our extremely long and porous borders. The macroeconomic policies in the country today are responsible for the closure of more than 150 textile units as well as the withdrawal of some long time multinational presence from Pakistan — a fact acknowledged by the Federal Finance Minister Muhammad Aurangzeb who then proceeded to argue that the fault lay with implementation of 90-year-old business models which are no longer effective today. And further claimed that Pakistan had attracted 20 new investors over the past 18 months. Two statistics released by the Finance Division in the December 2025 Update and Outlook, under the administrative control of the Ministry of Finance, are relevant: (i) foreign direct investment was USD 2,489.7 million July to June 2024-25, an amount that compares rather unfavourably with India’s USD 81 billion with USD 1,242.4 million during July-November 2024 against USD 927.4 million July-November 2025 — a decline of 25 percent; and (ii) portfolio investment went from positive USD 148.7 million July-November 2024 to negative USD 613 million July-November 2025. Needless to say, a decline in foreign direct and portfolio investment in the current year presages the need to revise the government’s macroeconomic policies rather than updating the business model by the private sector bringing to a sharp focus Dar’s comment that he sees a potential to achieve higher growth in the years ahead. That potential sadly will not be realised if the economic team leaders are unable to convince the Fund staff that there is a need to phase out the harsh upfront monetary and fiscal policies failing which they would need to increase their leverage by a dramatic, albeit voluntary reduction, in the current expenditure this year as well as the next that would reduce the pressure on an extremely tight fiscal policy. Disturbingly, there appears to be no move towards proactive adoption of such a policy framework as yet and, one can only hope that this comes under serious consideration by all the stakeholders. Copyright Business Recorder, 2026