What is wrong with Pakistan’s

Economy and What can be done.

 Foreign Affairs
• Peace with neighboring countries, is essential for durable
development.
• Indian repression continues in occupied Kashmir under the BJP’s
hard-line rule.
• Pakistan can not disarm unilaterally while India builds up arms to fulfil
its power ambitions.
• Trade sanctions or cut off.
• Pak – Afghan relation and U.S pressure.
 Corruption & Tax evasion
• ‘Past governments and leaders, who betrayed the people’s trust and
looted the country’s wealth’
• Unfortunately the amount that can or is recovered is a very small
portion of the looted money because of safe heavens where the
wealth is transferred.
• Not providing meaningful financial relief to the Pakistani exchequer.

• Honesty and meritocracy need to be imposed, are essential for

Pakistan to emerge as a dynamic modern state.
 Bad policies
• ‘A principle cause of Pakistan’s economic situation’

• The acceptance by Pakistan of almost total trade and financial

liberalization under the 1994 WTO agreements.

• The ability to protect local ( weak) industry through tariff and non-
tariff protections was removed. (Resulting in higher imports and
lower exports)
 High Imports
• A high propensity of Imports lead by domestic demand. – accounts
for 90% of GDP.
• Its domestic manufactures constitute only 10% of the economy.
• Stagnant exports due to under-invested manufacturers (mostly
textile), un-competitive and un-integrated in the global supply chain
• Pakistan’s 10pc tax-to-GDP ratio is half that of most other countries.
• Apart from the essential defence expenditures, 2pc of GDP is spent
on over 300 mostly loss-making state organisations.
Depreciating currency & IMF
• IMF asked for a ‘free float’ of the rupee implying drastic devaluation.

• following Pakistan’s cooperation on Afghanistan and the 40%

devaluation of the rupee, a $6 billion three-year IMF package has
been approved.

• It will help Pakistan raise substantial additional money from the bond
markets to meet the bills for its imports and repay debt.
Future Prospects for the Economy
• There is huge demand for consumer and durable goods and health,
education and other services.
• Un-exploited export potential in textiles, agriculture, engineering and
electronic goods.
• Opportunities in infrastructure development.
• The key to economic redemption is massive domestic and foreign
investment.
• Public- and private-sector investors in China, the GCC and elsewhere
have indicated interest in these Pakistan opportunities.

• The government needs to play an important role in promoting

domestic and foreign investment.

• “Technology may enable low-income countries to jump ahead in

economic development without retracing the paths taken by those in
advanced countries” – That maybe the best road to Pak’s economic
redemption.