Islamabad, Oct 14: The International Monetary Fund (IMF) has called on Pakistan to promptly eliminate preferential treatment, tax exemptions, and various protections for its agriculture and textile sectors. According to a report by The Dawn, the IMF claims that these practices have hindered the country’s growth potential for decades.

In its staff report on the underlying issues affecting Pakistan’s struggling economy, the IMF criticized both sectors for not only failing to contribute significantly to national revenue but also for consuming substantial public funds while remaining inefficient and uncompetitive. The IMF emphasized that as part of the recently approved USD 7 billion Extended Fund Facility (EFF), Pakistan must abandon economic practices from the past 75 years to break free from its recurring boom-bust cycles.

The report, released on October 10, highlighted that Pakistan has significantly lagged behind comparable nations, leading to stagnation that has deteriorated living standards and pushed over 40.5% of the population below the poverty line. The IMF pointed out that Pakistan has struggled to develop more sophisticated export products, with a low share of knowledge-intensive exports due to a lack of innovation. In 2022, Pakistan ranked 85th on the Economic Complexity Index, the same position it held in 2000.

The report noted that the country’s export basket is heavily weighted toward agriculture and textiles, including cotton yarn, rice, woven fabrics, beef, and leather apparel, which has limited its ability to shift resources toward more technologically advanced products. Although Pakistan does export some high-value goods, such as medicines and medical instruments, these sectors operate within a distorted economic framework.

The IMF report identified tariffs on intermediate and final goods as significant barriers to competitiveness and domestic market growth, which hinder the country’s transition to more advanced manufacturing. It stated that existing microeconomic distortions, such as public procurement of agricultural goods and fiscal incentives for low productivity sectors, have stymied reallocation efforts.

The textile sector was specifically identified as having the highest tax gap relative to its value added, benefiting from subsidies, preferential pricing on inputs, and concessional financing schemes between 2007 and 2022. The IMF emphasized the need for the government to simplify trade policies in the upcoming National Tariff Policy (2025-29) and to avoid using tariffs as a means to protect inefficient sectors, as such strategies weaken exports and inhibit participation in global value chains.

Additionally, the report cautioned against trade policies designed to promote specific domestic sectors, including export subsidies and local content requirements, which could lead to resource misallocation and potential violations of international obligations. The IMF pointed out that Pakistan’s export growth has been notably weak compared to regional peers, particularly stagnant during the 2010s.

The report also indicated that several complex goods lie within the technological reach of Pakistan’s current export basket, such as glassware, paints, chemicals, and rubber products. However, to foster the development of these new industries, the country must establish a level playing field for businesses and avoid targeted policies that favor certain sectors. The IMF stressed the importance of greater integration into global trade and easier access to imports, both as intermediate inputs for production and as final goods, to promote domestic competition. Removing fiscal incentives would help reduce resource misallocation and encourage fair pricing across firms.

Algiers, Oct 14 : President Droupadi Murmu praised the contributions of the Indian diaspora in promoting India’s global standing during her visit to Algeria, marking the first-ever visit by an Indian Head of State to the North African nation.

Murmu arrived in Algiers on Sunday, the first stop of her three-nation tour aimed at deepening India’s engagement with Africa. During her visit, she is scheduled to meet Algerian President Abdelmadjid Tebboune on Monday and will visit the King Abdulla Science and Technology Centre, a project developed by Indian firm Shapoorji Pallonji.

Shortly after her arrival, President Murmu interacted with members of the Indian community at a special reception. A statement from Rashtrapati Bhavan shared on social media platform X highlighted her address, saying, “The Indian community in Algeria serves as a bridge advancing India’s interests and soft power.”

In her speech, Murmu emphasized the role of the Indian diaspora in Algeria, noting that with India moving swiftly on its developmental path, the support and goodwill of Indian communities abroad, including in Algeria, remain crucial. “With the collective efforts of 1.4 billion Indians, we embark on a new journey of hopes and aspirations,” she remarked.

Murmu also spoke about the longstanding ties between India and Algeria, recalling India’s early support for Algeria’s independence struggle and the deep personal connections shared by leaders of both countries. “When Algeria gained independence in 1962, India was among the first to establish diplomatic relations,” she said, emphasizing the enduring friendship despite geographic distance.

Highlighting cultural connections, she spoke of the popularity of Indian films and TV shows in Algeria and the fond memories Algerians have of Indian teachers and doctors who worked in the country in the 70s and 80s. She noted the unique bond, adding that some Algerian brides even wear Indian sarees during their three-day wedding celebrations.

Murmu lauded the approximately 4,000 Indians living in Algeria, many of whom work on challenging projects in remote areas, and acknowledged the presence of Indian public and private companies operating in the country. She emphasized that these Indians are effectively India’s ambassadors, playing a key role in enhancing India’s image abroad.

“As India marches forward in the Amrit Kaal, we will continue to foster strong relationships with countries like Algeria, driven by the spirit of South-South cooperation,” she concluded, reaffirming India’s commitment to strengthening ties with African nations.

Following her visit to Algeria, President Murmu will continue her tour with stops in Mauritania and Malawi.