The government’s economic narrative remains upbeat, but the numbers tell a harder truth. Net foreign direct investment (FDI) rose just 5% in FY25 to $2.45 billion, while foreign firms pulled out $2.22 billion in profits and dividends.
These near-equal flows show that capital is treating Pakistan as a stopover rather than a destination, reflecting deep unease over erratic policy, weak contract enforcement, and punitive taxation.
The state’s own house remains in disarray. State-owned enterprises (SOEs), especially in the power sector, are bleeding public finances dry. Combined losses have climbed to roughly Rs5.9 trillion, with circular debt now hovering around Rs4.9 trillion.
Nearly one-fifth of generated electricity disappears through theft and technical losses. Tariff hikes and repeated bailouts have failed to address the root problem: a governance structure that protects inefficiency while punishing industry and consumers.
Meanwhile, the country’s growing resource strain threatens long-term stability. Water tables are falling at alarming rates, food imports are ballooning, and energy costs remain unstable.
A population set to reach 400 million by 2050 is pressing against infrastructure and systems that are neither modernised nor sustainably managed. Policymakers continue to operate in short bursts of crisis management, avoiding the hard reforms needed for resilience.
The external sector is no stronger. The celebrated current account surplus is temporary, inflated by a 38% jump in remittances after a crackdown on informal transfer channels. Exports, the backbone of any credible external balance, grew by a meagre 4%. With external debt repayments projected to surge by nearly 70% this fiscal year, the reserves built through painful stabilisation measures are already under threat.
Yes, Pakistan has stepped back from the cliff edge it faced last year. But the foundation is still cracked: a shrinking productive base, mismanaged SOEs, a tax regime that shelters the powerful, and an energy sector that swallows more than it delivers. Without a structural reset, today’s calm will prove fleeting.
The public has already paid for stabilisation through inflation and stagnating incomes. It is now the state’s turn to bear the cost through privatising loss-making SOEs, widening the tax base, enforcing energy-sector accountability, and finally creating conditions for investment and export growth.
If reforms are delayed yet again, the next shock will not just undo today’s fragile call, it will push the economy back to the brink, with no guarantee of another rescue.
