Editorial
Pakistan’s economy is passing through punishing adjustments under the IMF programme, and industry leaders blame survival pressures on rising input costs, heavy indirect taxation, high borrowing rates despite a lower policy rate, and the withdrawal of subsidised energy prices. These measures, imposed in the name of fiscal discipline, have transferred much of the burden to consumers. With nearly 75 to 80 percent of government revenue coming from indirect taxes, the poorest segments of society are hit the hardest. Unsurprisingly, poverty has crossed 42 percent—an alarming figure comparable to some of the poorest regions of the world.
Yet the paradox remains: money is still being made in Pakistan. The critical question is by whom. The IMF’s own assessment challenges decades of state-backed privileges granted to industrialists and large landlords, arguing that subsidies, protection, and favourable taxation weakened competition and locked resources into inefficient sectors. While the IMF has tightened the screws on elite incentives, evidence suggests the underlying power structures remain largely intact.
The government has secured selective relief, such as reduced electricity tariffs through expensive borrowing to manage circular debt, but safeguards imposed by the IMF ensure consumers ultimately pay the price. Similarly, deregulation of sugar and wheat markets—sectors dominated by powerful cartels—risks worsening collusion rather than delivering competitive pricing.
Provincial governments, meanwhile, remain heavily dependent on federal transfers, with weak performance in raising their own revenues. Even the much-publicised farm tax on wealthy landlords has yet to show meaningful collections. Development budgets continue to function as patronage tools, reinforcing entrenched influence networks.
Real estate, once a safe haven for untaxed wealth, is now stagnant due to new taxes and falling demand, driven by unemployment and declining incomes. This leaves one uncomfortable conclusion: those still prospering are often individuals positioned within weak institutions, exploiting low accountability, opaque systems, and everyday corruption. Until governance failures are confronted honestly, economic pain will persist—without real reform of who benefits and who pays.
