Economic Crisis in Pakistan: Present Challenges, Causes, Solutions

1. Introduction:
In the 21ST Century, the economy is taken as a ‘Religion’. It is the blood in the veins of the nation-state,
vitality in the human muscles, bases of brutal wars & a reason for governments to rule. Pakistan has
painfully experienced rising poverty and sinking economy; despite the world’s best canal system,
profitable geostrategic position, and unexplored resources. Pakistan’s economy is in a downward spiral.
Inflation is at 7%, foreign reserves are dwindling, the government is unable to pay its loans and is in the
danger of defaulting on its own debts.

2. Present Challenges
(i) Closed Economy- More imports, fewer exports, unproductive consumption-driven economy
(ii) High Foreign, Domestic Circular Debts & Balance of Payment Crisis
(iii) High Inflation and Discount Rates
(iv) Huge Trade Deficit
(v) Severe Energy & Water Crisis
(vi) Low Foreign Direct Investment FDI
(vii) Deindustrialization and Low Agriculture Yields
(viii) Corruption, Money Laundering, & Informal Parallel Black Economy
(ix) Low Tax-to-GDP Ratio
(x) Population Explosion
(xi) CPEC & Chinese Economic Dumping

3. Causes of Economic Crisis in Pakistan

(i) Political Instability
(ii) Non-conducive Environment for Business
(iii) Regional Conflicts & War on Terror
(iv) Economic Isolation from Neighboring Countries
(v) Inconsistent Policies of Government
(vi) Sharp Hike in Global Oil & Gas Prices
(vii) Flawed Taxation System
(viii) Wealth Concentration
(ix) Poor HDI Indicators
(x) Unskilled Labors

4. Solutions for Economic Crisis

(i) Tax & Structural Reforms
(ii) Privatization of Loss-Making State Entities
(iii) Curb Imports and Increase Exports
(iv) Utilizing Geostrategic Location for the Betterment of Economy (CPEC, TAPI,IPI, CASA)
(v) Opening Borders for Trade with Neighboring Countries
(vi) Promoting Startup Culture in the IT industry
(vii) Microfinancing for Small and Medium Enterprises
(viii) Rapid Construction of Special Economic Zones
(ix) Skill Development of Youth Population/ Human Resource Development
(x) Tourism Promotion via Open Visa Policies

5. Conclusion
 Topic : Economic crisis of H. Revisiting stabilization policies
1. Monetary policy
Pakistan 2. Fiscal policy

Outine:
1. Introduction
2. A look back to Pakistan's economy I. Revisiting structural reforms
1. Fiscal reforms
2. Tax reforms
3. Economic challenges of Pakistan
A. Less save more consume
B. Less export more import J. Miscellaneous
C. Pakistan's share in the world trade is 1. Gdp rate should be 25 percent
shrinking 2. Serious control over expense
D. Energy and water crisis 3. Maintain price and exchange stability
E. Balance of payment crisis 4. Reduce cost of doing business
F. Devaluation of money 5. Exploitation of Shadow economy
G. Low Foreign direct investment (FDI)
H. Informal ( Shadow) economy
I. Low tax to gross domestic ratio K. New market exploration
K. Pressing micro- macro economic issue L. Tourism and inland water
L. Population pressure transportation revenue generator for
government
M. CPEC as a harbinger of economic
4. Causes of economic uncertainty stability
A. Political instability
B. Corruption
C. Over budgetary allocation 6. Conclusion
D. Mismanagement and under utilization
of resources
E. Lack of consistent policies
F. Wealth concentration
G. Flawed taxation system
H. Untrained labour
I. Low capital formation
J. Badly lag in the social indicator
K. War on terror expense

5. Pragmatic steps to improve Pakistan's

economy
A. Charter of economy
B. Change in national Psyche and mindset
C. Building up human capital
D. Use of technology
E. Young labour force
F. Governance, devolution and
decentralization
G. Improved source of external funding