Pakistan’s per capita income is now the lowest among its regional peers, including India and Bangladesh, according to recent reports. This trend marks a sharp contrast to the period between 1980 and 2000, when Pakistan outperformed both countries in terms of per capita income and exports. While India and Bangladesh have achieved significant growth in their economies, Pakistan has faced challenges in keeping pace.
One of the major concerns highlighted in the reports is Pakistan’s limited public spending on critical sectors such as education and healthcare. Compared to India and Bangladesh, Pakistan allocates a smaller portion of its resources to these essential areas, which has implications for its social and economic development.
The International Monetary Fund (IMF) has also expressed concern over Pakistan’s economic challenges and emphasized the need for policy reforms. As part of its $7 billion loan program, the IMF has recommended revising tariff policies to boost exports and increasing the tax-to-GDP ratio to 16 percent.
To meet these goals, the IMF has urged Pakistan to impose taxes on previously untaxed sectors such as retail, agriculture, and real estate. It has also advised reducing the size of the federal government to improve efficiency. The IMF expects Pakistan to enhance its primary budget balance from 1 percent to 2.5 percent of GDP during the bailout period.
If Pakistan fails to meet these economic targets by December 2024, additional revenue-generating measures may be introduced by March 2025. These changes are seen as critical for stabilizing the country’s economy and addressing its long-standing fiscal challenges.
The reports underscore the urgency for Pakistan to adopt effective strategies to increase exports, strengthen public spending, and ensure sustainable economic growth. Achieving these objectives will require substantial policy adjustments and a collective effort to bring the country back on a competitive track with its regional neighbors.
