Structural Issues

• Low tax-to-GDP ratio (~9-10%) — narrow tax base, heavy reliance on indirect taxes
• Chronic twin deficits: fiscal deficit + current account deficit
• Circular debt in energy sector (unpaid subsidies/losses cascading through supply chain)
• Low savings & investment rates (~13-15% of GDP) vs regional peers

External Vulnerabilities

• Heavy reliance on imports (oil, machinery) → import-driven current account pressure
• Repeated IMF programs (23+ since 1958) — "stop-go" cycles, structural reforms rarely completed
• External debt servicing consumes large share of budget
• Low FDI compared to regional competitors (Bangladesh, Vietnam)

Structural/Sectoral Weaknesses

• Narrow export base — dominated by low-value-added textiles
• Agriculture stagnant productivity despite large labour share
• Energy sector: circular debt, high line losses, expensive capacity payments (esp. IPPs)
• Large informal economy — reduces tax collection & productivity gains

Governance & Institutional

• SOEs (PIA, Pakistan Steel, Railways) — chronic losses draining budget
• Political instability disrupts long-term economic planning
• Corruption & weak regulatory institutions

Recent Context (as of 2025-26)