Reforms crucial for Pakistan’s economic development

Since the independence in 1947, Pakistan has made some progress in economic development, but it’s still an underdeveloped country. With over 220 million inhabitants, the majority face numerous challenges, including high levels of poverty, unemployment, inflation, and external debt. To ensure sustainable economic growth and people’s progress, it’s essential to carry out complex reforms in various sectors. Below, we look at the issues that need to be resolved first for Pakistan’s wider growth. We will also discuss the details of existing problems and provide possible solutions.

Overhauling the tax system

Pakistan has one of the world’s lowest shares of tax revenues to GDP, which limits the government’s ability to finance infrastructure projects, social programmes, and other critical needs. Statistics for 2023 show that the country’s GDP is about 375 £ billion. This is not a bad figure, but it’s too low for a country with such a large population.

Therefore, reforming the tax system is one of the key tasks to ensure sustainable economic growth. Currently, Pakistan’s tax revenues account for about 10-12% of GDP, which is one of the lowest in the world. Furthermore, a large percentage of activity is in the shadow economy, which leads to a loss of potential tax income. To improve the situation, it’s necessary to introduce new laws and reduce the number of existing tax exceptions. For example, it’s possible to introduce a tax on online commerce, financial transactions, or inheritance or gift transfer duties.

Improving the education system

The more a country invests in higher education, the better its economic performance will be in the future. For example, in areas such as housing purchase and rental, food and industrial trade, service industries, banking, etc. People with higher education have a better chance of getting a better-paid job and being more productive workers, which leads to an increase in the country’s potential. In addition, raising the level of education can help reduce poverty and social inequality.

To start with, the government should pay more attention to building new schools and universities and improving facilities. It’s also important to provide high-quality teacher training programmes and introduce modern educational methods. This could be done by inviting lecturers from other countries to share their experiences and practices.

Infrastructure development

Facilities include buildings, roads, bridges, railways, airports, power grids, water supply, telecommunications systems, and other infrastructure. All of them are essential for the functioning of the economy and the lives of citizens, as they help improve the mobility of people. In addition, it reduces the delivery time of goods, increases the efficiency of logistics, and facilitates international trade. This is extremely significant, as the country’s main industries are metalworking, machine building, chemical, petrochemical, food, textile, and handicrafts.

Underdeveloped infrastructure limits economic growth and reduces the population’s living standards. The Pakistan’s government should focus more on modernising the electricity grid, expanding transport routes, and providing access to high-speed internet.

Access to Gambling

Currently, it has been illegal to gamble in Pakistan since 1977. Any such activity is strictly prohibited by law, but this does not mean that the residents are not interested in casinos. The experience of many countries proves that the casino business is a good opportunity to improve the economic performance of a country, as this sector is taxable if legalised.

The Pakistani government is afraid to face the problem of people’s addiction to gambling. However, if the country starts promoting responsible gaming and develops special player protection programmes, this can be avoided quickly. A striking example is the UK, which has introduced a self-exclusion option called GamStop for people who want to take a break from titles for a while. However, there is a list of sites with non GamStop games, but as we can see, this is still not a threat to the population because they are completely safe. Therefore, the legalisation of online gambling under strict state control will increase tax income and create new workplaces.

Improving living standards

Due to several economic difficulties, poor quality of education and healthcare, and unemployment, the public has faced difficulties in realising their professional potential. Therefore, along with resolving the above economic elements, Pakistan should also create new workplaces. Furthermore, it’s necessary to introduce social programmes such as cash assistance for low-income families, social housing, or subsidies for electricity and water, self-exclusions for those who need etc. These measures require a comprehensive approach and cooperation between the government, the public, the private sector, and international organisations. However, even small steps can lead to big results and dramatically change the country’s economic situation.

Final thoughts

To ensure sustainable economic development, the government of Pakistan needs to implement a series of fundamental reforms. Particular attention should be paid to the tax system, industry, energy, education, social protection, and infrastructure. Additionally, the country should consider legalising gambling, as it offers a large tax potential. Due to the lack of legal platforms, the locals are unprotected and have no place to turn to in case of financial or psychological problems. Only through systemic change it’s possible to create the conditions for economic growth and improve the quality of life. Pakistan’s younger generation from Islamabad and other Pakistani cities is in particular in need of a quality education system to contribute to the country in the future.


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