External
Issues
Internal
issues
•Level of external vulnerability
External •The impact of IMF
threats to •Fading trust of international
investors
Economy
of Pakistan •Global issues like bloc politics,
Russia-Ukraine war, Turbulence
in sea trade, US vs China tussle
Pattern of export
specialization focuses
mostly on the low-
quality segments
In services, a
transformation into
knowledge-based
exports is taking
place world wide
Incentive schemes
for existing
exporters tend to
focus on the well-
established sectors
• increase in the federal tax-to-GDP ratio from 10pc to 13pc in the
coming years.
Tax Policy • Pakistan has set a tax revenue target of 13 trillion rupees ($47
billion) for the fiscal year that began on July 1, a near-40% jump
from the prior year, and a sharp drop in its fiscal deficit to 5.9% of
gross domestic product from 7.4% the previous year.
Monetary, Exchange • Market determined exchange rate
Rate and Financial
Sector Policies • Withdrawal of import ban
Energy Sector Policies • Updating of Gas Prices
and State-Owned
Enterprises • Advancing Privatization and SOE support
https://www.imf.org/en/News/Articles/2024/07/12/pr-24273-pakistan-imf-reaches-agreement-on-economic-policies-for-37-month-eff
Impact of • Increased cost of LNG import
Russia- • Wheat crisis
Ukraine war • Steel import from Ukraine
• Over 90 percent of Pakistan's trade volume
Disruptions passes through maritime routes, with land
in Red Sea routes primarily serving China,
Afghanistan, India, and Iran by truck
• Unable to trade with Iran. IP gas pipeline
• No presence in emerging trade blocs like
Bloc politics
BRICS, IPEF, etc
• US vs China politics
Nearly
tax/gdp ration
10%. India
18% (WB)
Tax
potential in
Pak is 15%
of gdp
caused by inadequate tax
enforcement, a cash-
Registered for
based economy, and sales tax
ineffective tax obligations Manufactureres 14
Wholesalers 25
Under-invoicing, Retailers 8
particularly
rampant in the
real estate sector
Circular debt chaos: A never-
ending cycle of mounting debts Total Public Debt (AS percentage of GDP)
• Electricity consumers are set to pay
capacity payments amounting to Rs2. 8
trillion during the upcoming financial
year 2024-25 (NAPRA)
ADB Data 2023
Debt trap and bleeding state- Agricultural decline: Becoming a Shadow economy:
owned enterprises: Drowning in net food importer, losing self- Undocumented transactions and
debt, hemorrhaging finances sufficiency unregistered economic activity
• SOEs in Pakistan face Rs1.4tr loss over • Food Import bill: $9.01bn in FY22 • More than 40% of Pakistan’s GDP comes
two years (Ministry of Finance) (Pakistan Bureau of Statistics) from the informal sector, according to the
• The scandal of wheat import Small and Medium Enterprise
Development Authority (SMEDA).
Corruption roadblocks: Climate catastrophes and risk to
Accountability gaps hindering the economy:
progress • The World Bank, in its report titled
• Tax evasion ‘Pakistan Climate Change: A Risk
• Revenue loss Assessment,’ has cited Pakistan as a highly
susceptible country to extreme weather
• Pakistan is the 140 least corrupt nation events like floods, droughts, and heat
out of 180 countries (Corruption waves.
perception Index)
• 5th Risker country
