NATIONS must eventually move beyond survival and aim for transformative growth.
Pakistan, rich in human capital, again opts for caution.
The new federal budget prioritizes fiscal discipline and IMF compliance over bold reform.
Aiming to reduce the fiscal deficit from 5.9% to 3.9% of GDP, it leans on a record Rs1.5 trillion provincial surplus, 50% higher than last year.
While this aligns with the $7bn IMF programme and ensures a smooth September review, it limits space for structural reform and investment in productivity.
The focus remains on short-term stability rather than long-term economic transformation, missing the opportunity to address chronic issues like low growth, weak exports and industrial stagnation that continue to hold back Pakistan’s potential.
To its credit, the government has provided some income tax relief to salaried individuals, funded largely through Rs1 trillion in savings from lower domestic interest rates.
Additionally, concessions were granted to the influential real estate sector, indicating how fiscal room is often captured by vested interest groups rather than redirected to sectors that generate value, productivity, and global relevance.
But what is missing from this document is more profound than what it contains.
There is no blueprint here for the transformation of Pakistan’s economic foundations.
The nation has waited decades not just for a budget, but for a moment, a strategic pivot that redefines our economic priorities, diversifies our export base, and unleashes the innovation of our youth.
Sadly, this budget does not represent that moment.
Pakistan has set an ambitious target of boosting exports to $100 billion over the next five years through its Uraan programme.
But ambition must be matched by action.
As it stands, large-scale manufacturing continues to shrink.
Industry, constituting just 18% of GDP, shoulders almost 60% of the entire tax burden.
It is no surprise then that investment is dwindling, competitiveness is declining, and foreign direct investment remains elusive.
The government’s failure to address the inequities in the corporate tax regime, especially in relation to the super tax and sectoral inconsistencies, only reinforces the disincentive for productive capital to enter the formal economy.
There are glimmers of hope.
Long-awaited tariff reforms have finally been initiated, with the aim of phasing out protections granted to rent-seeking sectors.
Restrictions on non-filers regarding purchases of high-value assets are a much-needed attempt to widen the tax net.
The gradual rollback of tax exemptions in the former FATA and PATA regions is also a step toward a more level economic playing field.
But these are policy patches, not policy paradigms.
They tweak the existing structure without disrupting the dysfunctional logic that underpins it.
Nowhere is this dysfunction more obvious than in the government’s treatment of the IT sector.
Despite its organic rise to a $4 billion export industry, driven purely by Pakistan’s digitally savvy youth, the state continues to offer little in return.
Basic financial tools like PayPal remain unavailable, while the ecosystem for tech start-ups remains underfinanced and under-regulated.
Even as artificial intelligence, blockchain, and digital finance reshape the global economy, Pakistan remains fixated on extractive and low-value industries.
The budget makes lofty projections, such as reaching $25 billion in IT exports in five years, but fails to allocate meaningful resources or policy initiatives to make it happen.
Value addition remains a foreign concept in Pakistan’s export strategy.
Goods are exported in raw or semi-processed forms, often tainted by quality-control issues that tarnish the country’s credibility abroad.
A single dishonest exporter can undo the reputation of thousands.
Yet no institutional framework exists to ensure quality compliance, branding, or innovation support.
As a result, Pakistan’s total exports remain stagnant at around $30.5 billion, a figure that pales in comparison to regional peers like Bangladesh, whose exports exceeded $55 billion last year.
Even in areas like start-ups and entrepreneurship, arguably the most dynamic spaces of any developing economy, Pakistan has failed to provide a fertile ground.
Venture capital is scarce, regulatory red tape remains a hurdle, and traditional investors show little appetite for tech-enabled or export-oriented ideas.
Instead, domestic capital continues to chase low-risk, low-return sectors such as retail, snacks, and real estate.
The real tragedy is not a lack of resources but a lack of imagination.
Finance Minister Muhammad Aurangzeb deserves credit for steering Pakistan through a phase of relative stabilization.
His technical competence is visible in the fiscal arrangements, and in preventing the kind of macroeconomic chaos seen in previous years.
But stabilization is a pause, not a solution.
It buys time, and that time must be used to create the conditions for growth.
There is no evidence yet that this time is being used wisely.
Without strategic investment in industrial capacity, IT infrastructure, human capital, and export diversification, stability will soon give way to another round of crisis.
It is time for Pakistan’s policymakers to stop confusing survival with success.
A balanced budget is not a prosperous society.
What this country needs is not just a reduction in fiscal deficit, but an expansion in its economic imagination.
It needs to move beyond managing decline and toward engineering growth.
That can only happen when economic planning becomes more than an exercise in appeasing lenders or pacifying elites.
It must become a national mission, rooted in fairness, innovation, and a relentless pursuit of global competitiveness.
—The writer is PhD in Political Science, and visiting faculty at QAU Islamabad. (zafarkhansafdar@yahoo.com)
