Pakistan’s economic crossroads: Eurobond pressures, IMF review and the future of industry
By Commerce Reporter
Pakistan’s economy is entering a critical phase as the country faces major external repayments, ongoing IMF discussions, and important policy decisions affecting trade and industry. In an exclusive conversation with The Tribune International, Sheikh Muhammad Ibrahim, Chairman of the LCCI Founders Group, and CEO of Cannon Foam, shared his insights on Pakistan’s fiscal challenges, industrial outlook, and the growing promise of IT exports.
Q: Pakistan is reportedly facing around $1.3 billion in Eurobond repayments. How serious is this challenge?
Sheikh Muhammad Ibrahim:
It is certainly a serious matter. Eurobond repayments put immediate pressure on Pakistan’s foreign exchange reserves, and in the current global environment, refinancing is not easy or cheap. These repayments highlight the need for stronger export-led growth and better fiscal discipline. However, I want to stress that Pakistan has faced difficult repayment cycles before. The key is confidence, proper planning, and ensuring that our economy continues moving toward stability rather than uncertainty. From an industrialist’s point of view, external debt repayments affect the exchange rate, imports, and overall cost of doing business. When reserves are under pressure, businesses feel it immediately through inflation and higher input costs. So yes, it is a national challenge, but also an industrial challenge.
Q: How important is the IMF review at this stage for Pakistan?
Sheikh Muhammad Ibrahim:
The IMF review is extremely important, not because Pakistan wants to remain dependent, but because it signals credibility to international markets. A successful review brings not only funding but also confidence, which is essential for investment and stability. That said, reforms must be balanced. The business community believes that adjustment should not come at the cost of choking industry. We need structural reforms, yes, but also policies that allow businesses to grow. Exactly. Industry is ready to contribute, but we need predictability. If IMF conditions lead to sudden taxation or energy price shocks, manufacturers suffer. The review must ensure stability while protecting productive sectors.
Q: The government is considering a 20% excise duty on mobile phones. What is your view on this?
Sheikh Muhammad Ibrahim:
We strongly believe such a move should not be done. Mobile phones today are not a luxury; they are an essential tool for education, business, and connectivity. Imposing heavy excise duties will increase prices for ordinary citizens and may encourage smuggling and undocumented trade. Instead of higher duties, the government should promote local assembly, reduce regulatory complexity, and broaden the tax base. I agree completely. Excessive taxation does not always increase revenue; sometimes it reduces it by shrinking the market. Mobile phones are central to digital Pakistan. If we want freelancers, IT exporters, and young entrepreneurs to thrive, accessibility matters.
Q: Pakistan’s IT exports have reportedly reached $2.61 billion in the first seven months of the fiscal year. Is this a bright spot?
Sheikh Muhammad Ibrahim:
Absolutely, it is one of Pakistan’s most promising success stories. IT exports show what Pakistan can achieve when talent meets opportunity. This sector requires less physical infrastructure compared to traditional exports, yet it brings valuable foreign exchange. We must support IT through better internet connectivity, easier payment systems, and consistent policies. The future belongs to technology, and Pakistan must not miss this chance. IT growth is encouraging not only for the tech sector but also for the entire economy. A strong IT sector strengthens the rupee, creates jobs, and boosts innovation. Industry and technology must go hand in hand.
Q: What should Pakistan’s economic priority be in the coming months?
Sheikh Muhammad Ibrahim:
The priority must be export growth and industrial revival. Pakistan cannot rely solely on loans and remittances. We need to expand our manufacturing base, improve competitiveness, and ensure that exporters receive facilitation, not obstacles. Energy pricing, taxation consistency, and ease of doing business should be immediate focus areas. For manufacturers, the most important thing is cost stability. Industries cannot plan if electricity tariffs change unpredictably or raw materials become unaffordable due to currency fluctuations. The government must engage with chambers like LCCI to develop realistic policies.
Q: How do you see the role of the business community in Pakistan’s recovery?
Sheikh Muhammad Ibrahim:
The business community is not just a stakeholder; it is a driver of growth. Entrepreneurs create jobs, exports generate reserves, and industries sustain economic activity. The private sector is ready to support Pakistan’s recovery, but we need partnership, not pressure. Policies should encourage documentation, investment, and productivity rather than simply imposing new burdens. Pakistan’s industrialists want to expand. But expansion requires trust. If the government provides consistency and incentives, the private sector will deliver growth.
Q: Finally, what message would you give to policymakers and the public?
Sheikh Muhammad Ibrahim:
My message is one of cautious optimism. Pakistan has immense potential. We must make smart decisions—avoid unnecessary taxation like excise duty on mobile phones, support exports, and ensure reforms are growth-friendly.
Economic stability is possible when government and industry work together. I would add that Pakistan’s future lies in productivity, technology, and industrial strength. With the right direction, we can overcome repayment pressures and turn challenges into opportunities. As Pakistan navigates external repayments, IMF engagement, and domestic policy debates, voices from the business community stress the need for balanced reforms and export-driven growth. The coming months will be critical in shaping Pakistan’s economic path forward.
Q: Pakistan’s power generation increased in January, though hydel production declined. How does the energy situation impact industry?
Sheikh Muhammad Ibrahim:
Energy remains one of the most critical factors for Pakistan’s industrial competitiveness. While an increase in overall power generation is positive, the decline in hydel output is concerning because hydel is one of the cheapest sources of electricity.
When the energy mix shifts toward more expensive fuels, industries face higher tariffs, which ultimately raises the cost of production. This makes it difficult for Pakistani products to compete in international markets.
We have repeatedly emphasized that Pakistan must invest in affordable and sustainable energy sources. Without energy reforms, industrial revival will remain incomplete. For manufacturing units, energy costs directly affect pricing, profitability, and even employment. If tariffs rise sharply, businesses are forced to reduce output or delay expansion plans.
Pakistan needs a long-term energy strategy that ensures stable supply at reasonable prices. Hydel, solar, and other renewable sources must be prioritized to reduce dependency on costly imports.
Q: With global oil prices rising again, what risks do you foresee for Pakistan’s economy?
Sheikh Muhammad Ibrahim:
Rising oil prices create immediate challenges for Pakistan because we are still heavily dependent on imported fuel. Higher oil prices increase inflation, raise transportation costs, and widen the trade deficit.
This is why export growth becomes even more urgent. If we want to reduce vulnerability, Pakistan must earn more foreign exchange through exports, particularly in IT, textiles, and value-added manufacturing. Oil price shocks also impact industrial raw materials and logistics. The government must take timely measures to cushion the economy, especially for productive sectors, rather than imposing additional taxes.
Closing Remarks
The leader agreed that Pakistan stands at a defining moment. With prudent economic management, industry-friendly reforms, and strong support for emerging sectors like IT, Pakistan can overcome its fiscal pressures and move toward sustainable growth.
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