Pakistan’s Economic Outlook and Government Policy 2024-2025

In the fiscal year 2024-2025, the government of Pakistan is faced with the daunting task of addressing the numerous socio-economic challenges that have significantly impacted the lives of its citizens. With widespread issues like high inflation, rising prices, stagnant income, rising taxes and exorbitant utility costs, the average Pakistani is facing a daily struggle to make ends meet. These economic hardships are compounded by the deteriorating law and order situation, necessitating a new military operation, Azm-e-Istihkam, against criminal elements.

This combination of economic and security challenges requires urgent and effective policy interventions by the state to alleviate the suffering of citizens and restore stability. The government’s fiscal policy, including budget allocations and monetary interventions, plays a key role in managing inflationary pressures. Effective management of fiscal deficits, prudent monetary policy and targeted subsidies for vulnerable populations are essential measures to curb inflation and reduce the burden on the population.

Other South Asian countries, such as India, have implemented digital transformation initiatives to improve financial inclusion and access to services, while Bangladesh has focused on export-oriented industrialization and social development. The country’s ready-made garment sector has contributed significantly to GDP and employment, while Bhutan has prioritized social welfare programs to reduce poverty and improve health and education outcomes. Bhutan’s commitment to achieving gross national happiness (GNH) and protecting the environment has made it a regional leader in renewable energy production.

Sri Lanka has focused on infrastructure development and regional connectivity as key drivers of economic growth, with the Colombo Port City project set to create a financial hub and attract foreign investment. Social programmes have been implemented to support vulnerable populations and improve access to healthcare and education. These examples illustrate different approaches to addressing common socio-economic challenges in South Asia, promoting inclusive growth, improving living standards and strengthening resilience in the face of global economic uncertainty.

A major drag on Pakistan’s household economy is the rapid rise in the prices of goods and services. Price increases across sectors have outpaced income growth, leaving families struggling to meet basic needs. Addressing price stability requires comprehensive strategies, including boosting agricultural productivity, reducing import dependence, and promoting competition in markets to mitigate monopolistic practices that drive up prices.

The problem of low income is closely linked to Pakistan’s economic structure, which is dominated by informal employment and underemployment. Many Pakistanis work in the informal sector, without job security, social protection and adequate wages. Formalizing the informal economy through policy incentives, promoting entrepreneurship and investing in skills development can create decent work opportunities and improve income levels for marginalized segments of society.

High utility costs, including electricity, gas, and water, pose another major challenge for Pakistani households. Inefficient management, inadequate infrastructure, and mismanagement of subsidies contribute to rising utility bills that strain family budgets. Investing in renewable energy sources, improving transmission and distribution networks, and streamlining subsidy mechanisms can help stabilize utility costs while ensuring sustainable access to energy for all.

Tax policies are regressive and impose a permanent burden on middle and lower income groups. Reforming the tax system to make it more progressive, broadening the tax base and reducing tax avoidance are key steps to ensure a fair distribution of the fiscal burden. In addition, simplifying tax procedures and reducing bureaucratic obstacles can increase compliance and promote a culture of tax honesty among citizens.

Prioritizing economic reforms, strengthening security, developing social services, and encouraging good governance would help Pakistan alleviate the suffering of its citizens, promote sustainable development, and fulfill its potential as a dynamic and resilient country in the international arena.

The deteriorating law and order situation in Pakistan, exacerbated by criminal activity and terrorism, has necessitated stringent security measures, including military operations against culprits. While security operations are crucial to maintaining public safety, lasting peace and stability require a holistic approach. Strengthening law enforcement agencies, enhancing intelligence capabilities, and promoting community engagement are essential components of a comprehensive security strategy.

In addition to economic and security challenges, Pakistan faces pressing social issues such as education, healthcare, and environmental degradation. Access to quality education remains limited, particularly in rural areas, perpetuating socioeconomic inequalities and hampering human capital development. Investing in educational infrastructure, teacher training, and curriculum reform can improve educational outcomes and empower future generations. Pakistan’s healthcare services suffer from inadequate funding, infrastructure shortages, and unequal access, leaving millions without the care they need. Expanding healthcare coverage, modernizing facilities, and investing in preventive initiatives can improve healthcare delivery and reduce the financial burden on households struggling with disease.

Environmental degradation poses another existential threat to Pakistan’s future, with issues such as water scarcity, air pollution, and climate change affecting public health, agriculture, and livelihoods. Adopting sustainable development practices, conserving natural resources, and implementing climate change adaptation strategies are essential to protect the environment and ensure resilience to environmental threats.

Moreover, corruption remains a pervasive problem that undermines effective governance, erodes public trust, and diverts resources from essential public services. Strengthening anti-corruption measures, promoting transparency, and supporting accountability in government institutions are key steps in combating corruption and improving the delivery of public services.

Amid these complex challenges, the Government of Pakistan must adopt a coherent and inclusive policy framework that prioritizes the well-being of its citizens, promotes economic stability, strengthens security, and supports social development. Collaboration across government agencies, civil society organizations, private sector stakeholders, and international partners is essential to implement sustainable solutions and achieve inclusive growth. Pakistan must address its socio-economic challenges and chart a course for prosperity and resilience in fiscal year 2024-25.

Prioritizing economic reforms, strengthening security, developing social services, and encouraging good governance would help Pakistan alleviate the suffering of its citizens, promote sustainable development, and fulfill its potential as a dynamic and resilient country in the international arena.