Page 12 - CMA Journal (May-June 2025)

Exclusive Interview

It also ensures long-term growth, or at least underwrites
it. Unfortunately for Pakistan, mistakes in inflation,
interest rate, and exchange rate policies have often been Because of our very high budget
the bane of businesses.
Because of our very high budget deficit—caused by a deficit—caused by a lopsided NFC
lopsided NFC Award—we are unable to achieve high
growth with low inflation. Every time we try to grow the Award—we are unable to achieve
economy, we end up with a very high current account high growth with low inflation.
deficit, run out of dollars, and then have to seek
international support. Unless and until we bring our Every time we try to grow the
budget deficit down by revising the NFC Award and
reducing government expenditures, we will not be able economy, we end up with a very
to bring the current account deficit down. Only once
both the budget and current account deficits are high current account deficit, run
reduced, and inflation is controlled, can we achieve
sustained high growth. out of dollars, and then have to

Right now, if we try to pursue high growth, we will again seek international support
end up with higher inflation and a current account
deficit. That is why we have not been able to build
reserves even up to $14 billion or $15 billion. Interest
rates remain high for the same reason. and health can be effectively delivered to our citizens.
The exchange rate has also been an obsession for many Currently, provinces focus more on show projects,
Pakistani policymakers, who do not fully understand corruption, and similar issues, and the money does not
how exchange rate dynamics work. The idea of reach the education and health sectors. So those are the
nominally targeting the exchange rate is harmful, and three main things I would do.
that is why we repeatedly go through cycles of I would, of course, also introduce considerably lower tax
expansion and recession cycles which we can really rates once the NFC is revised. I would try to reduce gas
avoid by just not trying to peg the exchange rate to a and electricity rates — gas rates can be reduced even
certain level.
now, while electricity rates can be reduced after
ICMA: Given your experience in both policymaking privatization, which I would expedite. I would also
and private enterprise, how important is public-private implement pension reforms.
dialogue in shaping effective economic policies?
ICMA: Are you optimistic about Pakistan’s economic
Miftah Ismail: Public-private dialogue is very important, future? What gives you hope, and what major risks do
but it's not clear to me that this government actually you believe need urgent attention?
listens to the private sector. They have dialogue with the
Miftah Ismail: I am optimistic about Pakistan's future
private sector, but they don't listen to it. They only listen
only because of the young people of Pakistan. I think our
to their elite benefactors. For instance, sugar mills have
governance is completely ineffective—in fact,
an outsized importance in this government. There are
dysfunctional—and with all of this dysfunction in
other cartels that the government will do nothing about.
governance, we are not able to deliver anything to our
But otherwise, they don't really listen to the private
sector. They only listen to the elites, and that's it. citizens, either at the federal or provincial levels. What we
need to do is reduce the footprint of the government
ICMA: What are the top three policy actions the and fundamentally discard our current governance
government should prioritize to promote business model, replacing it with one that is effective and truly
sustainability and economic resilience? serves the people—making them literate and healthy.
We must provide health and education to our children.
Miftah Ismail: I would actually try to redo the NFC Award
and keep 80% of the new money coming into the federal But I am still optimistic that young people will always
government for reducing the federal budget deficit. find a way to live a better life, and as they strive for a
The second thing I would do is bring agriculture tax into better life for themselves, they will build this nation.
the federal tax net. I would apply a fixed tax on it, but it The Editorial Board thanks Dr. Miftah Ismail, Former Federal
should nonetheless be brought under the federal domain. Minister for Finance & Revenue, Former Chairman, Board of
Investment (BOI) and CEO & Director, Ismail Industries Limited
I would also ensure that the money going to the for sparing his precious time to give an exclusive interview for
provinces goes directly to divisions, so that education Chartered Management Accountant Journal.

10 ICMA’s Chartered Management Accountant, May-June 2025