Last chance

The Pakistani economy has long teetered on the edge of crisis, with successive governments failing to implement sustainable reforms. The problems are so deep-rooted that even under the best of circumstances, it will take years to bring the economy back on track. The situation is further complicated by external shocks – global supply chain disruptions, energy crises and geopolitical conflicts – that frequently undo any progress made. Recognising this dire situation, the Jang Media Group’s Geo News launched a special transmission, Aakhri Mauqa: Pakistan Kay Liye Kar Dalo, to bring financial experts together in the hopes of formulating a viable roadmap for economic restructuring. In its latest episode, Chairperson of the Federal Board of Revenue (FBR) Rashid Mehmood Langrial highlighted that, while Pakistan has the potential for growth, it must achieve this without creating further imbalances in the internal and external economic sectors. Pakistan’s over-reliance on imports has proven disastrous, particularly when global crises like the Covid-19 pandemic and the Russia-Ukraine war disrupted supply chains and drove up commodity prices. The result: a severe economic downturn that pushed the country to the brink of default.

Experts agree that a key lesson from Pakistan’s brief economic boom around 2016 is that it was driven largely by external factors – favourable exchange rates and Western outsourcing to the Global South. Instead of strengthening its domestic industries, Pakistan grew complacent. Political instability and weak governance further exacerbated the crisis, leading industries to shut down or relocate to more stable environments like the Middle East. The failure to curb extortionist groups that target businesses has also driven many profitable enterprises away. The FBR chief has acknowledged that corporate, salaried and manufacturing sectors are overburdened by taxes, while the wealthiest individuals and businesses manage to evade them. At some point, the government will have to make tough, unpopular decisions to expand the tax net – decisions previous administrations have avoided. While the current government has made commendable efforts to manage the economy, sustainability remains a major challenge; Pakistan just cannot continue to rely on foreign aid, grants or loans. Looking at neighbouring countries, one sees success stories of global brands that have captured international markets. But Pakistan has missed such opportunities. But it is not too late to rectify past mistakes. The solutions have been presented time and again, from World Bank reports to local think tank recommendations. Yet, crucial economic reforms remain stuck in bureaucratic limbo and political bickering. The much-touted Charter of Economy has remained absent from any real policymaking.

Pakistan produces little and consumes much, leading to accelerated deindustrialisation. Arbitrary energy price hikes, inconsistent policies and an obsession with consumption-driven growth have created a low-growth trap, plunging millions into economic distress. While IMF loans and foreign assistance may offer temporary relief, they are not a long-term solution. For decades, Pakistan has been held hostage by a rentier elite that prioritises personal gains over national prosperity. But how long can this continue? How long can Pakistan survive with a begging bowl in hand? The need for structural reform is urgent, and the solutions are clear: tax the untaxed, rationalise foreign exchange policies and reform the property and agricultural tax regimes. Pakistan’s economic crisis is not just about numbers but also about the future of its people. Without decisive action, the country risks continued economic stagnation, deepening inequality, and further erosion of investor confidence. If this truly is Pakistan’s ‘last chance’, then policymakers must act with the urgency and responsibility that the moment demands.