Key takeaways
- Tax-to-GDP is about 10.6% while public debt exceeds 70% of GDP.
- Exports of about US$32 billion trail remittances of US$38.3 billion in FY25.
- State enterprises lose over PKR 500 billion a year; circular debt reached PKR 4.7 trillion.
- Female labour participation of 24% and a Human Capital Index of 0.41 cap growth.
- A legal primary-surplus rule and US$15 billion of non-textile exports by FY28 are proposed targets.
In this Paradigm Shift column (November 2025), Dr. Ghulam Mohey-ud-din diagnoses Pakistan’s cycle of crisis and rescue and proposes a three-pillar structural reset in place of another round of short-term fixes.
The argument
The numbers in the column describe an economy running on borrowed time. Tax revenue is about 10.6 percent of GDP while public debt has passed 70 percent. Exports of around US$32 billion are smaller than the US$38.3 billion Pakistan received in remittances in FY25. State-owned enterprises lose more than PKR 500 billion a year, and power-sector circular debt stood at about PKR 4.7 trillion in 2025.
Human capital is the other constraint. Female labour force participation is 24 percent, Pakistan’s Human Capital Index score is 0.41, and around 40 percent of children are stunted. Climate shocks add a further layer of risk to infrastructure and farm output.
The author argues that these are governance and vision problems as much as technical ones, and points to East Asian developmental states that paired meritocratic institutions with long-term plans.
What needs to change
- Fiscal credibility: a legally binding primary surplus of 1.5 percent of GDP, taxation of agriculture, retail and real estate, and restructuring of loss-making state enterprises.
- Export-led industry: a target of US$15 billion in non-textile exports by FY28 through engineering, IT and agro-processing, with simpler customs and tariffs.
- Human development: raise female participation to 30 percent and invest in early nutrition and foundational learning, with cash transfers tied to schooling and health.
- Energy and climate: climate-screen public investment, expand flood insurance and reach 30 percent renewables by 2028.