ECONOMICS PROBLEMS OF

PAKISTAN
AND THERE SOLOUTION

MUHAMMAD DANISH MAJID

M11BBAO44
SUBMITTED TO:
MS.SADIA AHMAD

Pakistan is one of those developing countries which are

facing through the economic problems which are

hindering the

success

and

the

growth

of

the

country. There are so many economic problems in

Pakistan

which

are getting

threatening

and

devastating day by day and if they are remained

unattended

than

the

conditions might even get to

worse.

Here are few crucial economic problems

which

are

present in Pakistan and with their proper solutions

through which these problems can be resolved;

1.
Energy

Energy crisis:
crisis

is

the

most

important

and crucial

economic problem which has affected the growth

of the

state

adversely,

the

load

shedding

of

Electricity, petroleum, CNG and Natural Gas has caused

various problems and has resulted in the closure of
several

and

numerous industries

which

has

increased unemployment. The best solution to this

problem is to find other alternatives of generating
energy

which

might

include

solar

energy,

coal

energy and even thermal and wind energy which

might reduce the load on these available resources.

2.

Personal savings:

Out of every 100 rupees of our countrys income

we spend 85 and save only 15. Our personal
consumption ratio is 85% and saving ratio is 15%
which is very low. If we do not save more our
domestic investment will be low and by that we
face low economic growth. We need at least 2425% savings for 6% economic growth rate. Our
personal consumption should be low. We have to at
least double on savings rate otherwise we will
remain dependent on foreign sources.

3.

Import and exports:

Our exports ratio in the years before 2009 was

80% as compare to the imports. In 2013 it is come
down to the 50% it might go up to 60% but that 40
% of gap in financing needs in imports still exist.
Our basic commodities are made up by other
countries we dont want to use local commodities.
Unless we do not change the attitude towards
locally manufactured goods we are going to rely on
the outsiders to fill in this gap b/w imports and
exports. We need to cover up the gap b/w
exports so we could reduce external resources.

4.

Government spendings:

our

Fiscal

deficit

is

the

difference

between

the

revenues which are collected in a year and the

total expenditure incurred by the Government.
Pakistans government takes away 20% of national
income as its own. Out of the every rupee of
income received by a Pakistani, on average, tax
paid is only 9 paisas and 91 paisas remain with the
individual. In 2008 Pakistan s income was 13%
whereas its expenditures were 20%. There was a
fiscal deficit of 7% exist. And fiscal deficit has to be
financed from somewhere. Either go for outside
finance and aids or by the state bank of Pakistan.
Financing provides by the state banks creates high
inflation which effects middle class of Pakistan.
Many people say that our defense takes away a
large part of GDP but it is only 4% of the GDP.
Whereas our debt servicing every year takes away
large part of the GDP. Our government 40 %
expenditure is on debt servicing which is more
than 7% of the GDP. We have to control the debt
servicing expense and it should be brought down
year

by

year.

Also

imposing

some

tax

on

agriculture will help the government to maintain its

fiscal deficit.

5.

Our Share in the World Trade is

ShrinkingIn 1990, Pakistans share was 0.2% of the world

trade. After 20 years it has come down to 0.12% in
a very buoyant world economy. World trade has
been growing faster as compared to the world
output. India in the same period had doubled its
share from 0.7% to 61.4%, while Pakistan is going
the other way and that is the reason why
exports/imports imbalance is increasing. We are
not taking advantage of the opportunities which a
buoyant world economy is providing. Pakistan is
stuck with only a few commodities textiles,
leather, rice, sports, goods and the surgical goods.
We have not entered the markets for more
dynamic products. All our exports are to a few
markets the USA, EU and the Middle East. So this
narrow export base and very limited geographical
spread are not allowing us to expand our share.
Unless we improve the quality of our products, go
out and do the marketing abroad, invest in
research and development, the prospects do not
look promising. That is why we are lagging behind
other countries which from way back are over

taking Pakistan.

6.

Terrorism

Economic development is the only way forward,

but terrorism and extremism are badly hampering
the economic turnaround in Pakistan. The country
is passing through difficult times and we are
evolving a consensus strategy to sort out all issues
confronting the nation.

PRImE

MINISTER NAWAZ SHARIF

The government and army should take full initiative
altogether

with

the

help

of

local

and

federal

inelegancies to eliminate the terrorist and terrorism out

of the Pakistan.
such

bad

investors

The terrorist activities are creating

envoirment
or

economy.

that

does

They

envoirment for the investors.

not

should

help
create

either
free