Introduction
Pakistan’s economic woes – dwindling foreign exchange reserves, low exports,
high inflation, growing fiscal deficit, and current account deficit – are nothing new,
and once again, the country finds itself knocking on the doors of the International
Monetary Fund (IMF) for what will be its 23rd loan. While the exact amount of
this package has not been determined, Pakistan already owes the IMF billions from
previous programs. Indeed, 30.7 percent of Pakistan’s government expenditure
is earmarked for debt servicing, which cannot be supported by its decreasing
revenues. Already on the Financial Action Task Force’s (FATF) grey list, and with
the current Pakistan Tehreek-e-Insaaf (PTI) government enjoying internal
institutional consensus on the national agenda, Pakistan must focus its attention on
resolving its economic woes before it finds itself on the shores of bankruptcy.
Causes of Bad Economy
Political instability
Political stability is an important element for economic development as
political instability has a very acute problem of not only the developing
countries but also for developed countries. When there is political instability in
the country, it leads towards the deduction of foreign investors which ultimately
leads towards the low economic growth. The concept of political instability is
ascribed to Lipstel (1960) that stated that for a country to be deemed as stable,
it must have democracy or, even dictatorship continuously for 25 years. Political
instability can also describe as the tendency of the government collapse whatever
the reason may be. Literature shows that politically unstable countries are turned
out to be economically poor coupled with uncertain policies and decision
making. The investors perceive that frequent change in government results in
threat to policies and, resultantly, they intend to invest in safer environment
with less political uncertainty (Alesina & Perotti, 1996).
Security situation in Pakistan/war on terror:[
2001-2020, 150 billion loss in war on terror
Effects FDI (Foreign direct investment)
The FDI inflows are crucial for technology transfer, improvement in business
management practices, competition, exports, employment and deeper integration
with the world economy. But FDI to Pakistan has been on the decline since 2017
after Chinese investment in the power and transport sectors under the CPEC
initiative started to dry up. According to UNCTAD’s World Investment Report
2020, FDI stock declined sharply from $40.8bn to $34.8bn in two years by 2019,
entailing a hefty net outflow of $6bn. Consequently, we have seen a record
increase in our foreign debt both in absolute terms and as a ratio of the size of the
economy.
Pakistan has never been a favoured destination for foreign investors because of a
number of factors. Barring the record-high investment of $5.6bn and $5.4bn in
2007 and 2008, annual FDI inflows have accounted for less than 1pc of the
nation’s GDP although other states comparable to Pakistan have attracted close to
3pc of the size of their economies. While Pakistan, to a large extent, has
successfully addressed the security challenge and energy shortages — which have
kept foreign investors from betting on this country in recent years — it has clearly
not been enough to make Pakistan an attractive destination for foreign companies.
The government also needs to tackle other challenges including a burdensome
investment environment, policy inconsistency, an unskilled labour force as well as
the lack of developed industrial infrastructure to woo foreign investors for
sustained and rapid growth and a more stable external sector. Ease of doing
business, infrastructure development.
No investment, low GDP
FDI (Foreign Direct Investment)
According to State Bank of Pakistan (SBP), the foreign investment in Pakistan had
stood at $2.6 billion in fiscal year 2019-20. In June 2021 alone, the FDI amounted
to $135.4 million, which was 22.5% lower than the foreign investment of $174.8
million recorded in the same month of last year. Speaking to The Express Tribune,
Economist Muzammil Aslam said that the main reason behind the drop in FDI was
the Covid-19 pandemic. He added that the number of foreigners who visited
Pakistan in the last fiscal year nosedived on the back of global travel restrictions,
hence the volume of direct investment declined as well.
“FDI increases when foreigners land and explore business opportunities in the
country,” he said. “Covid-19 led to the closure of borders and travel curbs in many
countries which, in turn, restricted the number of foreigners who were eager to
explore and invest in Pakistan.”
Example is KFC
GNP (World where Pakistanis work)
GNI/Pop= Per capita (a social indicator)
Ease of doing work
According to world bank, Pakistan’s ranking in Ease of doing work is 108.
Low ease of doing work, low FDI
Pakistan eastern border is busy, western border also busy. So defence expenditure
increases due to bomb blasts. Stock exchange crash, no foreign investment
Compromise developmental work, then injuries, and at last effect on health
institutes.
Agriculture
Agricultural sector is indispensable to the country’s economic growth, food
security, employment generation and poverty alleviation particularly, at the rural
level. It contributes 19.2 percent to the GDP and provides employment to around
38.5 percent of the labor force. More than 65-70 percent of the population depends
on agriculture for its livelihood. Agricultural growth rate has been constrained by
shrinking arable land, climate change, water shortages, and large-scale population
and labour shift from rural to urban areas
Agrarian country
No DAM=water crises, so no agriculture in Cholistan and Balochistan=No role in
GDP, automatically low GDP rate.
Locust attack in 2020=2% fall in GDP
Famine
It inhibits productivity, slows economic growth, and places unnecessary burdens
on health and education systems. In famine-affected areas, millions of people are
malnourished and in desperate need of food and water. The prevalence of food
insecurity in the country is estimated at 38.1 percent of the population in 2021,
whereas the food insecure population in Pakistan is estimated to be 90.7 million. ...
The number of food insecure people in 2031 is projected at 45.6 million, a 49.7
percent decline from the 2021 estimate. (The News, 2021). In the 2020
Global Hunger Index, Pakistan ranks 88th out of the 107 countries with sufficient
data to calculate 2020 GHI scores. 92/116 in 2021
Natural disasters
In the 10 years since Hurricane Katrina, the world has seen an annual average of 260 major
natural disasters, with average annual economic losses of US$211 billion, insured losses of
US$63 billion, and 76,000 lives lost, according to Aon's latest annual Global Climate
Catastrophe Report. According to world bank, nearly 3 million people are affected by disasters
in Pakistan each year; the annual economic impact of floods – which affects 77% of all
Pakistanis affected by disasters – is estimated between $1.2 billion to $1.8 billion, equivalent
to 0.5% to 0.8% of Pakistan's GDP.
Urban flooding
Islamabad, Karachi
Political demonstrations
Sit-inns
Shah Alam Market close=15 arab rupees lose
The National Assembly was informed on Thursday that the country’s economy suffered an
estimated loss of over Rs1.5 billion due to the protest sit-ins and lockdowns held in the country
during 2012 and 2018, which also included the 126-day dharna staged by the Pakistan Tehreek-i-
Insaf in Islamabad in 2014. (DAWN, 2020)
Fast growing population
Low resources
Water and Energy crises
Poor governance
Rule of law (Timely justice)
Transparency (Corruption)
Accountability (FIA)
Efficiencies of Institutions (PIA, Steal meal)
Role of Institutions
NAB, FBR (Institutes which are related to accountability)
Devaluation of money
Dollar demand
Currency devaluation is the official lowering of the value of a
country's currency under a fixed exchange rate regime. Any rising of the
prices of such inputs through devaluation, would raise industrial costs and reduce
the intensity of capacity utilization.It examines that currency devaluation has
positioned Pakistan lose heavily both as seller and as a buyer and has made no
good substitute for remedial changes in economic policies. A key effect of
devaluation is that it makes the domestic currency cheaper relative to other
currencies. ... First, devaluation makes the country's exports relatively less
expensive for foreigners. Second, the devaluation makes foreign products
relatively more expensive for domestic consumers, thus discouraging imports.
Relationship with foreign countries
Global economic trade
Middle east crises
Dollar rate crises
Oil prices
Increase in Global market (COVID19)
Poor economic indicators
The World Bank has pointed out that Pakistan’s tax to GDP ratio dropped to below
average during the last two fiscal years. Furthermore, the overdependence on
withholding taxes(Tax employer deduct from the employee’s gross wages and pay
directly to government) is also bad because it converted into another kind of Sales
Tax.
(Add all those indicators which are going on -ve side)
Role of IFIs (International Financial Institutes)
Role of IMF (Effect our fiscal policy, because we depend on them due to loans and
debts)
Fiscal and Monetary policy
Heavy Foreign and Internal debt
Foreign debt= 122199.00 Million USD (Trading Economics)
Trade Deficit
The annual trade deficit reached $30.796bn in July-June FY21 from $23.180bn
over the corresponding period of last year. The annual import bill went up to
$56.091bn in FY21 from $44.574bn over the corresponding months of last year.
Exports posted a growth year-on-year 18.2pc or $3.9bn to $25.294bn in FY21 from
$21.394bn over the last year.
Trade gap has been widening since December 2020, mainly led by exponential
growth in imports and comparatively slow growth in exports. Import value for
cotton stood at $1.2bn due to shortage in domestic production while machinery
imports stood at over $8bn — an indication of expansion in industrial base. The
import bill is also rising mainly due to the increased imports of petroleum,
soybean, machinery, raw material and chemicals, mobile phones, fertilisers, tyres
and antibiotics and vaccines. (DAWN 2021)
Low Tax Net
The government’s broadening of tax base campaign has fallen flat as only 2.5
million people have filed annual income tax returns against 6.2 million National
Tax Number (NTN) holders that shows the weakening writ of the tax machinery.
The return filers were also 278,581 or 11% less than the last tax year despite Prime
Minister Imran Khan’s government giving a tax amnesty scheme and conceding
ground to traders in the hope of bringing them in the tax net. Another worrisome
aspect was that despite winning massive tax concessions from the government, the
number of income tax returns filed by traders fell this year as compared to last
year, according to the FBR’s statistics.
As compared to 415,624 returns filed by the traders in tax year 2018, this year only
399,534 traders filed returns, according to the FBR. About 16,100 traders escaped
the FBR’s net this year.
The 2.5-million filers - to be precise - were just 40% of the people and entities
registered with the FBR for income tax purposes, showing very poor enforcement.
As many as 6.2 million people are registered with the FBR and hold the NTN.
The filing of income tax return is the legal obligation of every person, earning
taxable income of more than Rs400,000 a year, has at least one 1,000cc car or
owns a home.
The FBR has published the new Active Taxpayers List (ATL) for tax year 2019
and 2.53 million people have submitted income tax returns.
In tax year 2018, over 2.8 million people had filed returns, said Sarwar.
Instead of showing any increase in income tax returns, the tax base actually shrank
by 279,000 or 11% in tax year 2019 (Tribune, 2020).Lack of education about the
tax system also holds back many potential taxpayers from coming into the system.
Take invasion
Undocumented economy
Undocumented economy or cash economy is big in Pakistan. According to the
Collins English Dictionary, cash economy means “an economic system, or part of
one, in which financial transactions are carried out in cash rather than via direct
debit, standing order, bank transfer, or credit card.” It is important to note that ever
since the documentation drive began in the country the informal cash economy is
becoming even bigger. ICCI President Sardar Yasir Ilyas Khan said that the
informal economy in Pakistan accounted for 35-50pc of the total economy,
therefore, the real GDP growth of the country could be enhanced significantly by
bringing informal sectors in the formal economy. On the other hand, he said,
IMF’s World Economic Outlook 2021 has projected the global economy to grow at
5.5pc, emerging economies 8.3pc, India 11.5pc, China 8.1pc, Malaysia 7pc,
Turkey 6pc, France 5.5pc, USA 5.1pc, Mexico 4.3pc. “Pakistan’s growth
projection is quite low than its actual potential because the undocumented
economy was not being considered”. Promoting the documented economy that
would help improve the tax revenue collection and achieving sustainable growth.
Smuggling
Illegal transection of money from abroad through unfair means
Taxes are not being paid
If taxes are evaded through legal ways
Not paying custom duties
45% population comprises of women and mostly of them stay at home after getting
education. They do not participate in Pakistan’s economy
Direct taxes (e.g. Income taxes) are low and indirect taxes are high (Due it many
rich people who should pay taxes, spare from taxes
Mineral deposits are depleting because they change their form after time if they are
not used and we are not extracting them out
44% of people are attached to agriculture sector but the distribution of land
ownership is highly unequal. Output relates to owner and the people who work in
land get their money according to their work or type of work. I f land is owned by
workers means give them on rent then more revenue can be generated. Increase
ownership and decrease tenency
A lot is needed to be done policy making
Not creating favorable business environment for investors (Make tax free zone,
concession in taxes, Deelings with investors to invest and get interest,industrial
zones)
Money laundering
Women make food at home and sale it out and exchange of money occurs without
documentation
Small shops have no documentation of money
Cloths are made and sale it out without documentation
Energy shortages
Political uncertainty
FDI (Linked with Political uncertainty)
Resource mobilization and allocation (if Government has allocated 10,00,000
rupees for a rural hospital but the owner of it does not mobilize the money due to
his inabilities, and at the end 6,00,000 rupees goes back to government. If
circulation is done, tax generated
Effects
Use in corruption
Investment and make assets
Solution:
Ensure an investment-friendly environment
To make a significant impact on the current account deficit, Pakistan needs to
ensure an investment-friendly environment that attracts more foreign direct
investment (FDI), instead of relying so heavily on foreign aid. According to the
World Bank’s Ease of Doing Business report, Pakistan ranks 136th out of 190
economies. To improve this ranking and draw more investment, Pakistan should
ease customs laws and regulations, improve the security of the country, and
rebrand and boost its international image as a desirable destination for tourism and
industry alike – a goal the current government is set to pursue as it eases its visa
policies (Visa on arrival, E-Visa, Lifted limitation over student, diplomat, business
visa, work visa procedure easy, duration of visa increase, Lifted restrictions to
travel in few cities, NOCs removed to move cantonment areas like Gilgit Baltistan
and Kashmir) , including its introduction of e-visas. It should also encourage
domestic investment through more flexible tax policies, particularly targeting small
and medium-sized enterprises (SMEs). Such measures would reposition Pakistan
on the international stage as stable, competitive ground for foreign investment.
Focus on building its domestic industry
Pakistan also needs to focus on building its domestic industry to expand its export
portfolio and enhance its competitiveness in the international markets. In 2018,
Pakistan ranked 107th out of 140 on the Global Competitiveness Index (GCI),
which measures the performance of countries in indicators such as infrastructure,
ICT adoption, macroeconomic stability, labor market, skills, financial stability,
innovation capacity, etc. The low ranking signifies that the Pakistani government
needs to take measures to stimulate economic growth and provide favorable
business environment.
Investing in research and development (R&D) to encourage product
innovation and enhance labor productivity.
The country’s ongoing energy crisis, which has caused significant losses in
industry, has led factory owners to increasingly relocate to countries such as
Bangladesh. Moreover, since its exports currently lose out to low-priced, good-
quality products from countries like China and Bangladesh, Pakistan needs to
modernize its industrial sector by establishing new plants and equipment to
enhance global integration. It can do this by investing in research and development
(R&D) to encourage product innovation and enhance labor productivity.
Broadening the country’s export portfolio and exploring new export
destinations
On top of these issues is the larger question of Pakistan’s failure to expand its
export portfolio beyond a few low value-added products, such as textiles, rice,
surgical goods, carpets, sports goods, and leather items, which is one of the largest
factors behind its balance of payments deficit. Broadening the country’s export
portfolio and exploring new export destinations such as Eastern European and
Central Asian countries could revitalize foreign exchange earnings. As a security-
oriented state, Pakistan’s priority has never been the economy, but it now needs to
focus more on geoeconomics over geostrategy.
Broaden its tax base
Currently, Pakistan is not taxing its agriculture sector and large businesses are
often given big tax breaks. Hence, Pakistan needs to broaden its tax base – by
taxing the agricultural produce of landlords with big land holdings and stop giving
tax amnesties to big businesses – instead of overburdening current taxpayers,
improve fiscal transparency, and strengthen tax collection coordination at the
national and provincial levels to ensure that revenue targets are met. These steps
would go a long way to addressing the myriad financial and deficit issues
stemming from the country’s weak governance.
Lack of education about the tax system also holds back many potential taxpayers
from coming into the system,” he added, urging the Federal Board of Revenue
(FBR) to organise awareness sessions at chambers of commerce and industry in
major cities to educate maximum traders about the benefits of filing taxes.
Documentation of economy
The growing influence of the informal economy, especially in developing countries
is a big challenge for political and economic managers. However, compelling
domestic realities and enabling international discourse are encouraging countries to
take up the challenge of either eliminating the informal sector or reducing its size
to the minimum. Several Latin American and Caribbean countries (ie Argentina,
Brazil, Ecuador, Dominican Republic, Uruguay) have succeeded in reducing
informality through a mix of policy measures in four key areas: improving
economic capacity or productivity, legislation, provision of incentives and
oversight. Countries in our region such as India and Bangladesh are also
vigorously pursuing policies aimed at eliminating informal economies.
According to different surveys and reports, the informal economy in Pakistan
accounts for 35-50 percent of the total economy. The informal sector in money
terms is well in the range of $85 billion. For a country like Pakistan, which is
confronted with serious economic challenges, it is absolutely essential to focus on
documenting the economy. The amnesty scheme announced by the PTI
government has twin purposes – documenting the economy, and welcoming the
business and trading community to participate in the legal economy. It offers yet
another opportunity to them to legalize their hidden assets and businesses to avail
the benefits that come by associating with the informal economy.(The News, 2019)
Special rehabilitation packages
Incentives and soft credit facilities for street vendors
Setting up permanent places for them to facilitate business and bring them under
the umbrella of taxation.
Tax-break facilities
Hassle-free procedure for paying tax
Legislation against money laundering
Money laundering is concealing or disguising the identity of illegally obtained
proceeds so that they appear to have originated from legitimate sources. It is
frequently a component of other, much more serious, crimes such as drug
trafficking, robbery or extortion (Interpol). It is further reported that the total
amount of money being laundered in the entire world is between US$500 billion
and US$1 trillion. There are three steps involved in this illegal process –
placement, layering, and integration. Firstly, the illegitimate funds are secretly
introduced into the legitimate financial system. Then, the money is moved around
to create confusion, sometimes by wiring or transferring through numerous fake
accounts. Finally, it is integrated into the financial system through additional
transactions, until the laundered money appears clean. Globally, the drive against
money laundering started in the 1970s, when the Bank Secrecy Act 1970 was
passed in the United States. In the case of Pakistan, the situation is different and
the anti-money laundering measures were introduced in the 2000s. Several steps
have been made in an attempt to control money laundering. Nevertheless, money
laundering is rampant in the country and this can be attributed to the weak
enforcement of laws and loopholes in the current regime.
In June 2018, Pakistan was included in the ‘grey list’ issued by the FATF,
which can have a detrimental impact on the Pakistani market. Currency dealers are
of the opinion that banks would be the first to suffer by this. Although, there are
no penalties that are included by being in the ‘grey list’, it is stated that as a result
of this, financial institutions would be reluctant to conduct business with the
Pakistani institutions. This, in turn, would impact trade and further increase
Pakistan’s current account deficit. Businesses are also severely affected by money
laundering as it deters investors. Furthermore, it is also stated that international
banks can pull their business out of Pakistan as a result of the inclusion in the ‘grey
list’.
If the situation worsens, the country can also be included in FATF’s ‘black
list’, further causing problems for oversees Pakistanis, financial institutions, and
among others, investors as well. In order to be excluded from the ‘grey list’,
Pakistan is faced with the dire responsibility of identifying terrorist financing and
bringing a stop to it.
Value Audit exports
Add value in Exports
Small business and enterprises
Give loans for small businesses
Trade liberalization
Trade liberalization is the removal or reduction of restrictions or barriers on
the free exchange of goods between nations. These barriers include tariffs, such
as duties and surcharges, and non-tariff barriers, such as licensing rules and quotas.
Promote Diplomacy, Irrespective of regions, color and religion
FIA: Free trade Agreement
NAB: Non-tariff barriers should be banned(Non-Tariff barriers: trade
restriction–such as a quota, embargo or sanction–that countries use to further their
political and economic goals)
Crises management or Good governance
Transparent, Rule of law
Reduce monopoly
PTCL was expensive due to competition
Create new energy resources
Increase revenue
State owned companies
Job creation
Structural adjustment
Change way of work
Reforms
Legislation
New laws amendments
Right sizing
Conclusion
The coming months are going to be tough for the current government as the rupee
is expected to depreciate further, causing inflation to rise. Pakistan’s economic
crisis cannot be resolved overnight. Support from the IMF and friendly countries
like Saudi Arabia, China, and the UAE will only provide some breathing room in
the short term to its shattered economy. Promoting manufacturing by creating a
more investment-friendly environment, broadening its tax base, and encouraging
innovation and modernization in export-led industries are just some of the most
urgent measures the government can take to address the growing fiscal and current
account deficit. Pakistan must take advantage of this moment of hard-won
reprieve by building a truly stable and sustainable economy before it once again
finds itself digging its own economic grave – and that of its people.
Challenges
Population growth:
Pakistan adds approximately 4.4 million people to its population each year, at the
current growth rate. The annual addition is equivalent to the combined population
of 40 of the smallest countries of the world, or the equivalent of the combined
population of Slovenia, Latvia and Iceland each year. The country’s population has
doubled in the last 29 years (since 1991), and it is estimated by the UN that there
will be 403m inhabitants by 2050, keeping Pakistan at fifth place in the world by
population size.
Its high fertility rate, of over 3.5 births per woman compared to 2.4 for South Asia
combined, has declined at a more modest pace than most of its developing country
peers, and is propelling population growth. The rate of increase is untenable. The
pressure rapid population growth is exerting on urban density, public services and
physical infrastructure, quality of life, resources, availability of water etc. is
becoming increasingly clear with every passing year.
It is propelling a dynamic of poverty, a poor quality of life, water stress, pollution
and environmental degradation that is unsustainable.
Several critical development challenges stalk Pakistan’s longer-term prospects.
Water:
Pakistan’s annual per capita water availability has declined to nearly 1,000 cubic
metres — at just about the ‘scarcity’ threshold. In 2009, the per capita water
availability in the country was around 1,500 cubic metres. Rising water scarcity is
the most existential of all the challenges facing Pakistan. According to the World
Resources Institute’s ‘Aqueduct Water Risk Atlas’, Pakistan ranks 14th in terms of
countries facing extremely high water risk (with India at number 13).
A large part of the decline in per capita availability is due to population growth and
urbanisation, and at this rate, it is expected that per capita water availability will
continue to drop precipitously unless urgent and concerted action is taken to rein in
the runaway growth in population, promote the judicious and efficient use of
water, and address the lack of water storage capacity.
The impact of water stress will not only be potentially debilitating due to lack of
availability for everyday use, but also due to its potentially large economic impact.
The country’s economy is heavily water-reliant, with Pakistan’s water intensity
rate — the amount of water, in cubic metres, used per unit of GDP — thought to be
the world’s highest. In other words, no economy in the world is more water-
intensive than Pakistan’s.
To compound matters, no large-sized country appears to have invested less in
water storage than Pakistan. Its water storage capacity is less than 30 days, while
India stores almost 200 days of water in its major peninsular rivers and the US can
hold 900 days of river run-off, according to the World Bank.
Power:
The country has been facing a crippling power crisis since the 1990s which has
worsened since around 2007. Protracted rolling blackouts across the country have
cost over two per cent of GDP annually in lost output alone, leading to anaemic
growth in investment and jobs, while stunting industry as well as exports.
The nature of the crisis has evolved over the years from one of chronic power
supply deficits to one where there is excess installed capacity but not enough cash
flow in the system to run it. The latter gives rise to the so-called ‘circular debt’
issue. Circular debt, or the cash flow shortfall in the power sector from the non-
payment of obligations by consumers, distribution companies, and the government,
has increased from 1.6pc of GDP (Rs 161 billion) in 2008, to 5.2pc of GDP
(Rs2,150bn) as of end June 2020. It has risen since to Rs2,300bn as of end
November.
The circular debt issue threatens the viability of the country’s energy supply chain.
It has also destabilised Pakistan’s fiscal management and imposed prohibitive
opportunity costs in terms of pre-empting government spending from critical
expenditure on infrastructure and social spending. Given its linkages with the rest
of the economy and large negative externalities, in conjunction with its magnitude
and trend, this issue can rightly be termed as one of Pakistan’s foremost
macroeconomic challenges.
Productivity:
From the agriculture sector to industry to exporter firms, from the public sector to
services, Pakistan faces a huge productivity challenge. According to ILO
estimations, between 2010 and 2019, output per worker grew less than 20pc in the
case of Pakistan, compared to an 86pc increase in China, 68pc in India, and 50pc
in Bangladesh.
A large part of the problem is that due to low educational attainment, the
workforce structure is predominantly skewed towards unskilled labour. Improving
access to education and outcomes in the sector, while scaling up efforts to skill the
labour force, are urgent priorities.
Politics:
Unsettled issues in the political structure, such as power sharing, centre-province
relations, dynastic and corrupt politics, the absence of commitment by any
stakeholder to genuine constitutional democracy, and, institutional checks and
balances, are all hindering the development path and the fight against rising
inequality.
The challenge for Pakistan is not just ‘everyday’ politics but ‘identity’ politics too.
If Pakistan’s attempts to reintroduce pluralism with respect to its minorities and
marginalised communities are successful, it will go a long way in producing a
stable polity and a dynamic of development.
Fiscal:
All roads lead to the fiscal framework — Pakistan’s weakest link. The state’s
foundations are built on its fiscal capacity. Without addressing its growing fiscal
challenges — inadequate revenue mobilisation, rising debt burden, falling
expenditure efficiency, a growing unfunded pension liability obligation, keeping
the energy supply chain afloat, and vertical distribution issues — Pakistan cannot
hope to meet the near-existential development challenges listed above.
Each of these development challenges will be given fuller treatment in subsequent
articles.
