akistan is at a difficult economic crossroads. Growth is sluggish, imports are expensive and key economic indicators remain underwhelming. The upcoming federal budget is not just another fiscal document — it is a benchmark of whether the country will finally move away from crisis management and launch on a long-term growth path. With inflation and interest rates showing significant downward trends, the time to shift gears for inclusive growth is now.

Let’s start with foreign exchange reserves. At just under $16 billion, our reserves can hardly cover two months of imports. This is particularly worrying for a country that imports over 70 per cent of its energy needs. The reliance on IMF bailouts and remittances, instead of export-led earnings, is not sustainable. To stabilise forex reserves, Pakistan needs to build a more robust export base. This means facilitating agro-processing, IT services, engineering goods and higher value-added textile products rather than sticking to cotton yarn and rice.

On the income front, Pakistan’s per capita income stands at $1,574. That figure not only lags behind regional peers but also fails to reflect rising inflation and unemployment. Salaried individuals contributed over Rs 500 billion in taxes last year, bearing a disproportionate burden. As we head to the next budget, the government must lower the tax burden on the salaried class while broadening the tax base. It’s unfair and unsustainable that a small, compliant segment keeps paying for the rest.

Our economy has another silent emergency: the jobless youth. With nearly 60 per cent of the population under 30, the country has a massive potential demographic dividend. We have so far failed to turn it into an economic opportunity. According to Labour Force Survey data, the youth unemployment rate is over 11 per cent. Much higher figures have been reported for the educated youth. We need major investments in vocational training, digital education and entrepreneurship programmes to absorb this youth bulge productively.

Industry, once the hope for job creation and innovation, is struggling. High energy costs, lack of financing and an unequal FTA with China have hollowed out domestic manufacturing. Cheap, mass-produced Chinese goods have captured our markets. Local industries suffer from outdated technology and poor quality control. It’s not about closing borders, but about negotiating fairer terms and supporting our industries to become competitive through policy stability and modern infrastructure.

An economy that cannot feed, employ or sustain its people on its own terms is not just weak— it is highly vulnerable.

The agriculture sector, too, has immense untapped potential. It continues to be held back by low productivity, water mismanagement and outdated supply chains. Fixing agriculture doesn’t require miracles — it only requires smarter irrigation, access to finance and better storage and transport systems. The goal should be to link farmers with markets and make agriculture a viable business.

The debt burden is another urgent problem. Interest payments alone consumed over 50 per cent of the federal budget last year. Capacity payments in the energy sector have crossed Rs 2 trillion, adding to circular debt and inflating power tariffs. The situation is clearly unsustainable.

So what should the upcoming budget prioritise? Three things: reduce tax burden on the middle class, create incentives for industrial and SME growth, and rationalise energy pricing. Most of all, it should introduce structural reforms that reduce our reliance on borrowing and imports.

Pakistan has talent, a young population, fertile land and a strategic location. What it needs is coherent policymaking. The 2025 budget must be the starting point of an economic revival plan that goes beyond firefighting and aims at long-term resilience.

An economy that cannot feed, employ or sustain its people on its own terms is not just weak — it is highly vulnerable. This budget is our chance to change that.

The author is a freelance journalist based in Islamabad, specializing in reporting on the economy, energy and climate issues. He tweets/posts @fezi22 and can be reached at fparacha@gmail.com.