Looking beyond survival

Budget 2026-2027

By: Tahir Rashdi

 Every year in Pakistan the budget season comes around with a lot of excitement like a family wedding that everyone knows will cost a lot of money. People still plan it as if money is not a big deal. The budget documents get really thick the speeches get more confident. The numbers are presented in a very positive way like when people have not checked their bank account in a while.

Pakistanis have a special relationship with news about the economy. When prices go up everyone suddenly becomes an economist, every tea stall a policy institute. And when the Economic Survey and the federal budget arrive, millions of citizens suddenly develop an interest in fiscal deficits.

Imagine a man who has been struggling with debt for years. One day he is proud to say that he has stopped borrowing money. paid some bills on time and kept the electricity on for three months in a row. These are achievements. His life has definitely gotten better.

But nobody would say he is now rich. Pakistan’s economy has been like him. The policy makers have been focused on avoiding problems like not having enough money to pay its debts, defending the rupee and ensuring investors do not get scared. Success was measured by avoiding a disaster, not by making progress. The goal was to survive, not thrive.

Things might be getting better. The economy is growing at 3.7 percent. The economy is now worth Rs 126.9 trillion, or $456 billion. The average per capita income has gone from $1,751 to $1,901. The country has forex reserves of $17.1 billion. The debt-to-GDP ratio is down to 68.5 percent. IT exports have crossed $3.38 billion and manufacturing has grown 6.6 percent.

These are things we should not ignore. For a country once spoken of as a default risk, being stable is an achievement. It creates the conditions for investment, planning and growth. No country can develop if it is always worried about money.

Being stable is not enough. As Nobel Laureate Amartya Sen said, development should not just be about making money, but making people’s lives better. Economic historian Douglas North said that long-term success depends on the systems and rules that shape how people behave and make decisions.

Pakistan’s own history teaches us this. Since the 1960s the country has had periods of good growth. Many of those gains did not last because they were not accompanied by improvements in education, institutions, technology and productivity.

In the 1960s Pakistan was often cited as one of the promising economies in Asia. People from developing countries came to visit and learn from Pakistan’s planning institutions and growth mode. While some East Asian countries launched themselves into sustained growth and change. Pakistan's progress was interrupted by political instability, weak institutions and a reliance on short-term fixes. 

The big question is whether Pakistan can turn stability into change. What is the budget’s answer?

Pakistan has managed to avoid some problems. Now the question is not whether it can survive but whether it can really change. The answer will not come from economists or investors, but from the people. It will come from the graduate looking for a job, the entrepreneur trying to start a business, the farmer dealing with climate change and the family hoping for a better future. Economic Surveys look at the past. Budgets plan for the future. History will judge the results.

The budget is a statement of what the government wants to do. What the government wants to do is very clear. It wants to focus on infrastructure like roads and water systems and on completing projects already underway. The government has allocated a lot of money for these things, including Rs 224 billion for the National Highway Authority and over Rs103 billion for water-related projects.

This makes sense. Economies grow when markets are connected and it is easy to move goods and people. Thus roads are not just roads, but the veins of the economy carrying trade, investment and productivity.

The question is not whether infrastructure is important, but whether it is enough. The budget shows us what the government’s priorities are. The Higher Education Commission gets Rs 46 billion and. the Ministry of Federal Education and Professional Training Rs 36 billion. Pakistan’s challenge is not just about connecting cities, but preparing its people for a changing world.

A country can import machines. It cannot import a skilled workforce. Development is often presented as a choice between building things and educating people. Successful countries know that you need both. Roads carry goods. Educated people create them. Ports facilitate exports. Skilled workers make those exports competitive. Infrastructure enables growth. Human capital sustains it.

The contrast is striking because Pakistan's greatest resource is its people. Two-thirds of the population is under 30. Whether this becomes good or bad depends on the quality of schools, universities and training programmes.

The budget contains some signs of forward thinking. There is money allocated for programnes like the Prime Minister’s Youth Programme and the IT Youth Programme and for initiatives like Quantum Valley Pakistan. The challenge is one of scale. In an age of intelligence and technological disruption small projects will not be enough. Pakistan needs a commitment to human capital like that which transformed countries like South Korea, Singapore and Vietnam.

Perhaps the encouraging thing about the budget is its philosophy. The government says it wants to focus on completing existing projects rather than starting new ones. This is a big change from the past when governments would often announce new projects just to get attention.

The outcome is not predetermined. It depends on the choices the government makes today. Economists often warn about the "middle-income trap," where countries grow initially but then struggle to make the transition to innovation-driven prosperity. While Pakistan has not yet fully entered this category the warning remains relevant. Growth unaccompanied by productivity gains, technological advancement and institutional improvement will eventually reach its limits.

The economy shows some signs of growth, in IT, exports and entrepreneurial activity. This progress also highlights the need to invest in digital skills, scientific research, technological innovation and institutional capacity.

India’s technological progress is an example to learn from. Bengaluru became a technology hub because of decades of investment in engineering education and research. Pakistan\s technology sector has a lot of potential but to really make the most of it the country needs to focus on building a strong system that supports innovation rather than just looking at export numbers.

Climate change is no longer in the future, the 2022 floods showed how quickly environmental disasters can undo years of progress.

Issues like not having water, extreme weather and problems with farming are not just environmental issues they are also economic and security issues.

However the money set aside for climate change is still relatively small. The Climate Change Division will get about Rs 2.47 billion and the Green Pakistan Programme about Rs 2.33 billion. Considering how vulnerable Pakistan is, it is fair to ask if enough is being done.

The problem is that taking care of the environment and growing the economy are no longer separate. A flood that destroys crops and homes is not an environmental disaster, but also a setback for the economy and a burden on the country’s finances. 

Budgets are not about money, they show what a country's priorities are, what the government values and who they want to help. Every decision about how to spend money is a choice between ideas about how to develop the country.

As the saying goes "What gets measured gets managed." Governments focus on things like growth, exports and finances because they are easy to measure. However some of the important things that help a country prosper like trust in institutions, good governance, education and social mobility are harder to measure. That does not mean they are not important.

Nobel laureates Daron Acemoglu and James Robinson have said that countries do well when their institutions are strong, fair and effective. Economic plans work not because money is spent but because the government can carry out the plans efficiently and transparently.

This is especially important for Pakistan. The country has had plans and strategies but the problem has always been putting them into action. If just having plans and attending seminars could make a country rich Pakistan would be a superpower by now.

Pakistan’s economic discussions often go back and forth between two ideas. One side says that the country needs to grow and then it can share the wealth. The other side says that growth is not enough and that the benefits need to be shared. To really develop, Pakistan needs to find a balance. Growth brings in money. Strong institutions are needed to turn that money into opportunities for people.

Projects that are delayed, policies that keep changing and institutions that are not working well, together have often stopped initiatives from succeeding. Thus the important thing about a budget is not how much money is spent, but whether the government can actually make things happen.

The Economic Survey says that Pakistan’s economy is stable again. The Budget 2026-27 tries to build on this by investing in infrastructure, water security and technology. But history shows that countries are not changed just by managing their finances.

Other countries have succeeded by investing in specific areas. South Korea invested in education, Singapore in making its government work better, China in productivity, Vietnam invested in exports. None succeeded just by balancing their budgets, but because they had a long-term plan for their country.

Pakistan has managed to avoid some problems. Now the question is not whether it can survive but whether it can really change.

The answer will not come from economists or investors, but from the people. It will come from the graduate looking for a job, the entrepreneur trying to start a business, the farmer dealing with climate change and the family hoping for a better future.

Economic Surveys look at the past. Budgets plan for the future. History will judge the results.

The writer is a freelance columnist.