akistan’s economy is facing several complex challenges, marked by high inflation, high lending rates and rising tariffs for gas and electricity. The problems are exacerbated by poor governance. Inflation stood at 12.60 percent as of mid-2024, eroding purchasing power and affecting the cost of living.

The central bank’s policy rate, which has been persistently high to curb inflation, ranging from 22 percent to existing 19.5 percent, has stifled economic growth by making borrowing costly for businesses and consumers alike. Concurrently, high electricity tariffs have significantly raised operational costs for industries, contributing to their financial strain and reduced competitiveness.

Mismanagement and inefficiencies within state-owned enterprises (SOEs) are a significant drain on government’s resources. SOEs, including entities in sectors such as energy and transportation, are plagued by corruption, operational inefficiencies and financial losses, diverting critical revenue away from more productive uses. These enterprises require substantial subsidies, which further strain the national budget and undermine fiscal stability.

The root causes of Pakistan’s economic instability include chronic governance issues including persistent corruption, weak institutional frameworks and a lack of effective policy implementation. The government’s failure to undertake essential reforms has exacerbated these problems. Crucial reforms include restructuring and privatising SOEs to improve efficiency, rehashing the tax system to enhance revenue collection and implementing structural changes to enhance transparency and accountability in governance. Additionally, addressing energy sector inefficiencies, reducing subsidy dependence and promoting industrial growth through supportive policies are critical for stabilising the economy.

Media reports have highlighted a recent study by Asian Development Bank revealing that up to 70 percent of Pakistan’s population fails to pay bills due to a combination of financial difficulties and inefficiencies in billing. This issue,........

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