ISLAMABAD: Pakistan is considering revisiting its free trade agreements (FTAs) with various countries, as part of broader efforts to address persistent economic challenges, including pressure on foreign exchange reserves and a growing trade imbalance. This was stated by Special Assistant to the Prime Minister (SAPM) on Finance Haroon Akhtar during a press conference on Saturday, where he elaborated on the structural issues affecting the economy.
Akhtar noted that Pakistan’s import bill rises disproportionately whenever the economy begins to grow, creating stress on the country’s limited reserves. He attributed this imbalance to the nature of FTAs Pakistan has signed in the past, arguing that in several instances the agreements were entered into without adequate preparation or assessment of domestic capacity. He said that Pakistan’s exports have not kept pace with rising imports, turning the country into an import-reliant economy, and maintained that there is no harm in revisiting the terms of these agreements.
Free Trade Agreements are arrangements between countries aimed at reducing or eliminating trade barriers such as tariffs, to encourage the exchange of goods and services. While they are meant to promote mutual trade benefits, such agreements can prove detrimental if one party lacks the productive capacity or competitiveness to benefit equally.
Pakistan has signed several FTAs with countries including China and Sri Lanka. The China-Pakistan Free Trade Agreement (CPFTA), in particular, has been widely debated for yielding a trade deficit that favours Beijing.
Drawing parallels with the United States, Akhtar pointed to Washington’s imposition of reciprocal tariffs not only as a negotiation tactic, but as a strategic move to revive its own manufacturing base. He suggested that Pakistan too needs to re-evaluate its trade policies with a view to bolstering local industry.
In another key policy announcement, the SAPM revealed that the government is preparing to introduce a bankruptcy law aimed at providing relief to businesses affected by the country’s macroeconomic challenges. Citing statistics from the Credit Information Bureau (CIB), he said that nearly 90 percent of the cases reported involve firms impacted by high interest rates, energy costs, and heavy corporate taxation. He emphasised that without a legal mechanism for business restructuring, many companies would be pushed towards closure despite being viable in the long run.
The proposed bankruptcy law is expected to offer distressed businesses a structured path to rehabilitation, which Akhtar described as essential for economic resilience. He argued that failing to provide such a legal safety net reflects poorly on the country’s economic governance.
He also underlined the importance of the Credit Information Bureau, which collects and shares borrowers’ credit histories with financial institutions to help manage lending risks. The high volume of defaulted cases in the current environment, he said, reflects deeper economic dysfunction rather than business mismanagement.
Akhtar concluded by stressing the need to build up the country’s foreign exchange reserves through greater domestic investment. He argued that a strong base of local investment would serve as a magnet for foreign investors, reinforcing economic stability and growth. His remarks come at a time when Pakistan is attempting to stabilise its economy through policy reforms, external financing, and institutional restructuring.
