With a per capita GDP of $1,680 in FY2024 and forecasts for FY2025 indicating further rise to $2,405, Pakistan has made notable strides in its economic recovery and perseverance in the face of adversity.

With a per capita GDP of $2,996, Islamabad outperformed a number of regional standards, including the $2,106 national average for India.

Punjab also demonstrated improvement, as evidenced by its per capita income of $1,713.60, which was 2% more than the national average and added to the country’s improving economic situation.

With a $1,748 per capita income, Sindh has also been a good performer. In the meantime, Khyber Pakhtunkhwa (KPK) and Balochistan reported per capita incomes of $1,388.41 and $1,106, respectively, indicating consistent economic growth in these regions.

Gilgit-Baltistan and Azad Jammu and Kashmir also recorded noteworthy per capita incomes of $1,550 and $1,730, reflecting the government’s focus on balanced regional development.

India’s geographical differences, on the other hand, showed notable inequality. While southern states reported a per capita income of $3,421, northern regions, particularly those under the influence of Hindutva politics, reported much lower figures, with only $813.

India also grapples with severe poverty, with 234 million people living below the poverty line, according to the UNDP and Oxford Poverty and Human Development Initiative. According to the International Labour Organization, youth unemployment in India has also increased to concerning proportions, rising from 35.2% to 65.7%.

Despite facing external pressures, Pakistan’s economy has shown resilience, enduring a $150 billion loss over two decades due to foreign-sponsored terrorism, compounded by the burden of hosting 4 to 5 million Afghan refugees. However, Pakistan’s dedication to stability and long-term development is still evident.

Pakistan’s focus on sustainable and inclusive growth presents a clear roadmap for transforming current challenges into future opportunities, paving the way for long-term prosperity.

In the current fiscal year, Pakistan’s economic growth is expected to reach 3%, and forecasts for the upcoming year indicate that it will continue to accelerate, according to State Bank of Pakistan (SBP) Governor Jameel Ahmad.

The chairman of the central bank emphasized the significance of steady and progressive growth in order to prevent future balance of payments problems during a press conference on Thursday.

He pointed out that although Pakistan’s economy has grown by an average of 3.5% over the past ten years, the nation occasionally sees notable growth spikes followed by difficulties in the years that follow.

He stated that “the path to stable growth lies in gradual and consistent development,” emphasizing that the SBP will concentrate on controlling inflation and obstacles related to the foreign account.

The governor of the SBP also disclosed the SBP’s inflation target, which is set at 5 to 7 percent for the current fiscal year. Other sectors would profit as well, he said, if economic indicators improve and inflation stays under control.

“We hope that Pakistan’s current account will remain in surplus through December,” he said.

Remittances and the stabilization of foreign debt

Another update from the governor was that Pakistan’s foreign debt is still manageable. Currently, the nation owes $100.8 billion in foreign debt.

Despite the $500 million increase in this amount as a result of debt revaluation, Ahmad guaranteed that the overall debt situation has much improved since 2022.

Remittances have been leveling off and are projected to reach $35 billion by the end of this fiscal year, according to Mr. Jameel, who spoke about foreign exchange inflows. Additionally, exports are improving, but he urged greater efforts to boost export volumes, which are crucial for lowering dependency on remittances.

Prioritize SMEs and export growth.

“Achieving sustainable economic growth will depend on increasing exports and reducing dependency on remittances,” Jameel Ahmad stated.

Additionally, the SBP governor emphasized that foreign exchange reserves are being used efficiently to satisfy the needs of international businesses and investors. Pakistan gave $330 million in dividends and earnings to foreign investors in 2023, and by 2024, that amount had increased to $2.2 billion.

He also emphasized the government’s significant emphasis on growing the Small and Medium Enterprises (SMEs) sector, which he thinks would be essential to economic growth. SME loans up to Rs 10 million can now be obtained under the new regulations without collateral.

Additionally, the government has increased the loan target for SMEs from Rs 543 billion to Rs 1,100 billion, and banks have been directed to lend an additional Rs 100 billion to SMEs each year.

The ministry has suggested that the federal budget for the next fiscal year be unveiled around the first week of June, according to specifics.

By the end of May 2025, it is suggested that all budget documents be completed. It is suggested that the annual planning committee meeting take place in the first week of May, while a meeting of the National Economic Council is set for the second week.

Furthermore, the Budget Strategy Paper should be adopted by April 18, 2025, and the sessions of the Budget Review Committee should take place from February 11 to February 28.

The proposal also calls for the projections of the foreign exchange budget to be submitted by May 7.

The Federal Board of Revenue (FBR) has also started working on the budget for the next fiscal year 2025–2026. It was previously reported that stakeholders are being invited to submit their ideas by January 31.

The FBR has formally written to all pertinent parties to solicit their comments on the budget for the upcoming fiscal year.

Income tax, sales tax, federal excise duty, and revenue-raising ideas are among the particular proposals that stakeholders are asked to submit. The board is also seeking suggestions for expanding the scope of current taxes and widening the tax base.

Along with proposals pertaining to taxes, the FBR has requested feedback on general sales tax for all companies as well as ideas for phasing away tax exemptions gradually. The FBR has underlined how important it is to simplify tax processes and make rules more understandable for taxpayers.