For years Pakistan has been in the grip of endless economic and financial crises, with no solution in sight. In recent months, the World Bank and other international financial institutions as well as rating agencies have pinpointed the existential threat facing Pakistan’s economy because of the worsening external and fiscal imbalances. Long over-due reforms await implementation as the ruling elites are reluctant to turn away from their profligate policies and way of life.

Growth forecasts for 2024 and next year are depressing – an estimated two percent – the fourth lowest after Myanmar, Azerbaijan, and Nauru. On the other hand, the dark shadows of hyper-inflation loom large, recording 29.7 percent in December 2023 and around 26 percent in 2024, the highest among 46 countries. Unemployment and poverty rates are constantly on the rise, while foreign reserves are under severe pressure due to the increasing trade deficit and debt repayments. According to the World Bank, Pakistan has been in a stagflation phase for a prolonged period. The Bank recently said that another 10 million more are at risk of joining about 98 million people who are currently living below the poverty line in Pakistan. The 2024 UNDP Human Development Report ranks Pakistan 164th out of 193 countries in the ‘low development’ category on the Human Development Index which assesses a nation’s progress in improving its citizens’ lives over time. It is unfortunate that Pakistan lags behind most of its South Asian neighbours on some key development indices, such as gender equality, multidimensional poverty, inequality and environmental sustainability.

As a result, Pakistan is far from achieving Its SDG targets. With less than six years left to 2030, UNDP’s Integrated SDG Insights Report 2023 for Pakistan shows that the country is on track to achieve only 35 out of 169 SDG targets. With an annual SDG financing gap of US$3.72 billion, Pakistan would need to spend 16 per cent of its annual GDP to achieve all the SDGs by 2030.

As per expert calculations, to accelerate SDG progress by 2030, Pakistan would need to undertake structural economic reforms such as expanding the tax revenue base and bringing agriculture with the tax net. This will call for major policy shifts to weaken the political hold of the feudal lobby which has a strong presence in the corridors of power.

A critical need is adoption of a long-term sustainable and efficient debt management through innovative financing solutions, such as debt swaps, and reducing the back breaking debt service burden. At present, Pakistan spends more on debt servicing each year than it does on public health and education. Surely we have got our priorities wrong. At the same time a new policy package should be put together to stimulate private sector investments locally and attract foreign investors. A conducive business climate is critical to creating new jobs, expanding tech usage and digital access, and strengthening the industrial and services sector. The private sector is the main driving force behind economic development, job creation, tax revenue, lower inflation, and an improved standard of living for citizens.

As per media reports, UNDP Pakistan and the Sustainable Development Policy Institute (SDPI) and other other development actors and partners in Pakistan, have been engaged in developing proposals to lay a solid foundation for sustainable growth in the future. These include investing in expanding the skills and livelihoods base in productive sectors.

Equally important are economic reforms that are people-centered, including those on taxation, sustainable debt management, and opening up new private sector investment opportunities. The government should also take steps to increase investments in digital transformation of public services and local businesses, to reach more people otherwise left behind. Another priority need is changing the development financing mix for the future. UNDP’s SDG Investment and Climate Finance Facility has identified bankable projects worth $8.8 billion that look ahead and are quality-assured, as a springboard for sustainable growth, especially in micro and small businesses sectors.

It is relevant to note in this context that the Pakistan 2024 National Human Development Report “Doing Digital for Development” focuses on digital transformation as one way to strengthen the rebound capabilities of individuals, communities and the institutions that serve them. For a country where more than half of the population (54.3 percent) still do not have access to the Internet, digital inclusion and transformation will be key to accelerating the country’s path to sustainable development and improving Pakistan’s overall HDI ranking. The requisite policy initiatives cannot be implemented without a strong political will and a clear path carved by a visionary leadership. In the past there has been too much talk by rulers about the need for structural reforms. It is now time for them to walk the talk and prove their mettle.