We stand at a crossroads of history and fixing Pakistan’s economy is the need of the hour. Repeated claims of “recovery” mask the reality of an economy struggling under unsustainable debt, rising trade imbalances and decades of mismanagement. The challenges are structural but the solutions are neither impossible nor out of reach. By rethinking government spending, reshaping imports and investing in long-term productivity, Pakistan can begin the difficult journey from crisis to stability.
Is Pakistan Bankrupt? The Reality Behind “Recovery” Claims
Despite optimistic government statements regarding fixing Pakistan’s economy, the fundamentals tell a different story. Pakistan has lived on loans for over two decades, borrowing not for development but to repay previous debts. The development budget is nearly extinct, and loans are no longer tied to growth-oriented projects.
In the Financial Year 2024-25, exports were US$ 32.3 billion and imports were US$ 58.38 billion. These numbers are staggering and show the stark imbalance between cash in and cash out. Until such an imbalance exists, we will be far away from recovery.
Cutting Government Expenditures: A First Step
The defence totals have risen sharply since FY2020-21 (roughly PKR ~1.29 – 1.30 Trillions) to PKR 2.122 Trillions in FY2024-25, a nominal roughly 65% increase across the five years (IDSA, ISSI).
The “non-combat” share which includes pensions, operating / recurring functions, cantonment / agency transfers appears to be a growing component of the total defence bill, press and specialist commentary increasingly highlight pensions and operating expenses as material budget pressures. This is important because these items are recurrent and crowd out development spending. (JANES, Reuters)
Import Reduction: Tackling the Trade Deficit
A quarter of Pakistan’s imports are fuel-related (TradingEconomics). Petrol rationing, limiting car imports, and halting non-commercial vehicle assembly could significantly cut the bill (ProPakistani). Shifting intercity transport back to rail, as it was until the 1970s, would lower long-term dependence on oil imports (BuisnessRecorder).
Banning non-essential imports, from luxury cars to redundant consumer goods, is critical (Tribune).
Restricting foreign exchange outflows is not just austerity — it is survival.
Taxation: Why Higher Taxes Won’t Solve the Crisis
Tax-to-GDP ratios are often cited as proof that Pakistan collects too little revenue (BuisnessRecorder). But tightening taxation on weak industries leads to shutdowns, reducing overall revenue (PKrevenue, BuisnessRecorder). With most landowners being small farmers, the scope for large-scale agricultural taxation is limited (Tribune).
Instead of chasing impossible tax targets, the focus must be on expenditure control and improving productivity.
Protecting Food Security in drive towards Fixing Pakistan’s Economy: Wheat, Pulses, and Oil seeds
Food security is as much an economic challenge as a social one (DAWN). Three essentials i-e wheat, pulses and cooking oil drive Pakistan’s import bill and inflation.
- Wheat: Production falls short by 2–4 million tons annually, forcing expensive imports (PakistanToday). Mandatory cultivation quotas by district could close the gap.
- Pulses: Over 60% are imported (DND). Allocating specific belts in Punjab and Sindh exclusively to pulse cultivation, backed by subsidies, could reduce reliance on imports.
- Cooking Oil: Pakistan imports nearly 70-75 % raw materials for edible oils (BuisnessRecorder). Encouraging sunflower cultivation on dedicated acreage would ease pressure on foreign reserves.
Managing these three commodities domestically would stabilize household budgets and protect against global price shocks.
Ending the Drain of Protected Industries and Fixing Pakistan’s Economy
Several industries survive only through government protection and subsidies. Sugar mills are a prime example — overproduction, expensive local prices and repeated export subsidies drain the exchequer.
Shutting down unviable mills would stop the economic hemorrhage.
The same holds for paper mills, protected by high duties on raw paper while finished books are imported cheaply (TheNews).
Such distortions destroy competitiveness and keep entire sectors dependent on artificial support.
Rethinking Public vs Private Management
Ownership is not the issue — management is. Successful models show that government ownership with private management can deliver efficiency (DAWN, TheNews). From energy projects to infrastructure and even schools and hospitals, public-private partnerships have worked where the state provides assets, and the private sector ensures performance.
This hybrid approach avoids the inefficiencies of pure state control while preventing reckless privatizations that destroy value.
Conclusion: Reform Towards Fixing Pakistan’s Economy
Fixing Pakistan’s economy is not an overnight task. Years of poor policies, subsidies for the elite, and reliance on loans have pushed the country to the brink. Yet the way forward is clear:
- Slash unnecessary government and defense expenditures.
- Curb non-essential imports and cut fuel dependency.
- Secure food production domestically.
- End subsidies to inefficient industries.
- Leverage public-private partnerships for efficient management.
Without these steps, short-term bailouts will continue while long-term collapse looms. The choice is between difficult reforms today or an economic freefall tomorrow.
FAQs
Q1. Why is Pakistan’s debt considered unsustainable?
Pakistan’s debt is mostly used to repay old loans instead of investing in development or growth. This creates a cycle where borrowing keeps rising without improving productivity.
Q2. Can cutting imports really fix Pakistan’s economy?
Yes, especially in fuel and luxury goods. Since a quarter of imports are fuel-related, rationing and shifting transport to rail could save billions annually.
Q3. Why can’t higher taxes solve Pakistan’s financial crisis?
Over-taxing weak industries leads to shutdowns, reducing revenue. Instead of focusing on more taxes, Pakistan must cut expenditures and increase productivity.
Q4. How can Pakistan achieve food security?
By mandating wheat quotas, dedicating land for pulses, and promoting sunflower cultivation, Pakistan can reduce its dependence on costly imports and shield households from global price shocks.
Share Your Thoughts
Pakistan’s economic crisis affects us all — from the food on our tables to the jobs in our markets. Do you think bold reforms like cutting defence spending or banning luxury imports are realistic? Or are there other solutions we’re ignoring? Share your thoughts below — your voice matters in shaping the debate!
Additional Material
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