Pakistan narrowly avoided a sovereign debt default in 2024 and succeeded in securing relative economic stability through an International Monetary Fund bailout, a report said.
However, the year brought increasing challenges, including higher taxes and an economic recession, which left the wage-working class under enormous pressure.
The government’s decision, under IMF terms, to raise the tax burden on salaried individuals to 39%, led to a 57% jump in tax payments, totaling 198 billion rupees between July and November. This unprecedented tax increase has stressed families and fueled economic discontent.
Finance Minister Muhammad Aurangzeb and Deputy Prime Minister Ishaq Dar struggled to unify economic decision-making, with Dar playing a dominant role.
Despite the establishment of the Private Investment Facilitation Board, no significant foreign direct investment has been achieved.
The IMF’s $7 billion Extended Fund Facility, Pakistan’s 25th bailout, helped defer $17 billion in external debt obligations.
However, the lack of sustainable debt restructuring leaves Pakistan dependent on IMF support, with the threat of default continuing.
Government departments expressed their dissatisfaction with the conditions of the International Monetary Fund. The FBR has failed to reach its target of Rs 13 trillion, citing faulty assumptions.
Other ministries, including the Ministry of Petroleum and Agriculture, have raised concerns about subsidy cuts and agricultural tax increases.
Efforts to collect Rs50 billion from traders under a new tax regime have also failed.
At the same time, government spending rose by 20%, with no significant reduction in the size of the federal cabinet or ministries.
The rupee stabilized at 278 rupees per dollar, which helped bring inflation down to its lowest level in six years. However, import controls and an undervalued rupee stifled informal market activities, limiting economic opportunities.
Young professionals are increasingly looking for opportunities abroad due to limited job opportunities and high costs of living.
The energy sector remained a continuing challenge, as high electricity bills increased the burden on low- and middle-income families.
Benazir’s income support program provided temporary relief but failed to lift people out of poverty.
On the geopolitical front, the European Union has questioned Pakistan’s compliance with its GSP pledges, citing military court convictions of political activists.
As Donald Trump prepares to return to the White House, Pakistan’s ability to secure favorable IMF results may be tested.