ISLAMABAD: The World Bank has urged Pakistan to reform its skewed preferential trade agreements with 10 bilateral partners, adopt a market-determined exchange rate, and implement deeper structural reforms to revive exports and achieve sustainable economic growth.
In its policy advice, the Bank noted that Pakistan’s exports have declined from 16 per cent of GDP in the 1990s to just around 10 per cent in 2024, with the export basket still dominated by low-value textiles and agricultural products. It observed that the country’s economic upturns have been driven largely by debt and remittance-fuelled consumption rather than export-led growth.
The World Bank recommended maintaining a flexible exchange rate to ensure competitiveness, developing a deep interbank market without State Bank of Pakistan (SBP) intervention, and publishing detailed data on market transactions. It warned that a tightly managed exchange rate has historically triggered balance-of-payment crises, undermining investor confidence and long-term growth.
Highlighting productivity and competitiveness challenges, the Bank pointed to high tariffs, costly inputs, red tape, and the burden of more than 200 state-owned enterprises as key constraints.
It also cited high energy costs, limited digital infrastructure, and inadequate export support systems as major obstacles, estimating Pakistan’s “missing exports” at nearly $60 billion.
The Bank emphasized that Pakistan’s preferential trade agreements remain shallow, covering a narrow range of goods. It advised upgrading these pacts to include services, investment, and digital trade, and exploring opportunities in emerging markets such as Sub-Saharan Africa and Latin America.
It further called for building negotiation capacity, strengthening the National Tariff Commission, operationalising the EXIM Bank, and continuing tariff reforms to boost competitiveness and integrate Pakistan more deeply into global value chains.
