ADB's concern

It has become impossible to ignore that Pakistan's gravest economic fault lies in its missed tax targets. The Asian Development Bank, in its latest outlook, has kept Pakistan's growth forecast unchanged at 3%, cautioning that weak revenue collection and delays in reforms remain the biggest threats to stability. This stands in stark contrast to the government's own 4.2% projection, which looks more wishful than realistic.

The ADB's warning is neither new nor surprising. The IMF too has voiced doubts over the credibility of the FBR's reform plan. For years, successive governments have pledged to broaden the tax base, only to retreat when confronted by lobbies unwilling to part with their privileges. The result is an inequitable and anaemic system where salaried classes shoulder the heaviest load, while powerful sectors remain untouched. In turn, the state borrows to fill the gaps, perpetuating its cycle of debt and dependence on foreign creditors.

This failure has a direct cost. Circular debt in the power sector alone is expected to rise by another Rs500 billion this year, financed not by efficiency gains but by subsidies and fresh loans. Rather than correcting structural distortions, governments have chosen to kick the can down the road. Meanwhile, climate shocks have reduced farm incomes and dented exports, exposing how fragile the economic base remains. In effect, Pakistan continues to live on borrowed money, borrowed time and borrowed credibility.

The ADB has underlined that investor confidence hinges on credibility and consistency. Without meaningful revenue reform, governance improvements will remain hollow promises. Already, missed targets erode faith among lenders and deter foreign investors, who see only drift and indecision. These missed tax targets are indeed the most glaring evidence of a state unwilling to live within its means and corrective measures are desperately required.