ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has released a set of four independent ‘shadow’ policy studies proposing an alternative economic framework to accelerate growth, broaden the tax base, and reduce fiscal imbalances.

The documents were prepared by the Economic Policy and Business Development Think Tank (EPBD) and released at the FPCCI office on Monday. They focused on structural reforms to lift Pakistan’s economy onto a higher, more sustainable growth path.

The documents — Tax Policy and Administration Reforms, Shadow Federal Budget 2026-27, Shadow Economic Survey of Pakistan 2026, and Shadow Five-Year Development Plan 2026-31 — collectively set out a reform agenda centred on private-sector-led growth, fiscal consolidation, and institutional restructuring.

The Tax Policy and Administration Reforms study conducted an analysis of 21 sectors, revealing persistent informality and under-taxation in retail, services, and agriculture, alongside significant distortions in real estate.

FPCCI projects Rs19.6tr revenue for FY27, cuts subsidies and pushes privatisation to fix fiscal imbalances

The tax system places an excessive burden on corporate entities and salaried individuals, while extensive exemptions disproportionately benefit higher-income groups. Heavy reliance on withholding and presumptive taxes limits transparency and documentation.

The sales tax regime compounds these problems, with an effective collection rate of just 12 per cent against a standard rate of 18pc, eroded by multiple rates, widespread exemptions, federal-provincial misalignment, and inefficient refund mechanisms that constrain exporters’ liquidity.

The study projects that improved compliance and base expansion could raise the tax-to-GDP ratio by 4-6 percentage points over the medium term and increase the investment-to-GDP ratio by over 18pc, subject to policy certainty and continuity.

The Shadow Federal Budget 2026-27 sets out an alternative fiscal framework to achieve a zero fiscal deficit within three years through expenditure rationalisation, privatisation of state-owned enterprises, and pension and subsidy reforms.

It proposed stronger parliamentary scrutiny of the budget process and a shift towards performance-based budgeting, while projecting total revenues of Rs19.6 trillion and a reduced fiscal deficit of 2.6pc of GDP in FY27. The study also outlines measures to improve debt management and expand non-debt financing sources, including foreign investment and remittances.

It noted that public debt has increased exponentially from approximately Rs19 trillion in FY16 to Rs80tr in FY26, ranging from 65pc to 75pc of GDP, driven mainly by persistent fiscal deficits, currency devaluations, high SBP policy rates, and higher interest payments.

Domestic borrowings have grown from Rs1.263tr in FY16 to Rs9.775tr in FY25, accounting for a major share of total federal government current expenditures.

In the Shadow Economic Survey of Pakistan 2026, the study offers an independent assessment of macroeconomic performance and sets out a growth trajectory under a reform scenario, projecting GDP expansion to 8.5pc by FY31.

The survey identifies key drivers of growth across manufacturing, exports, housing, the digital economy, and human capital, and forecasts improvements in inflation, investment, and external balances.

It estimates that structural reforms across priority sectors could add up to $236 billion to the economy over five years, supported by increases in exports and remittances.

The Shadow Five-Year Development Plan 2026-31 outlines a long-term development strategy based on sectoral diagnostics and public-private collaboration, projecting the creation of around 20 million jobs by FY31.

It identifies housing and construction, agriculture, and exports as major engines of growth, alongside measures to rationalise public sector development spending and reduce the size of government. The plan also emphasises export diversification, trade facilitation, and investment incentives to push total exports beyond $100bn over the medium term.

Published in Dawn, May 26th, 2026