economyrecovery

1.1 Growth, Investment & Savings

Pakistan has been one of the few economies in Asia that recorded an average growth rate of over 5 percent per annum during 1947-2007. The growth pattern during last five years is a “V-shaped growth curve” in Pakistan and high economic growth is not sustainable. After the growth episodes’ economy experiences, a sudden and significant contraction, often due to external shocks such as financial crises, natural disasters, or geopolitical events. This leads to a rapid decrease in economic activity, lower consumer spending, reduced investment, and rising unemployment. But after hitting the bottom of the economic contraction, the economy begins to recover at a similarly rapid pace.
Despite a satisfactory growth performance, the pace of development remained erratic as the growth spurts were sporadic. Pakistan’s volatile development experience resulted from reliance on external assistance and other exogenous factors. The high growth periods in the 1960s, 1980s and 2000s were also the periods of high inflows of foreign economic assistance.
The failure to raise domestic rates of saving even to the South Asian level led to low investment rates and volatile growth in the other decades. The economic and social welfare indicators also remained cheerless. Deindustrialization became a visible feature, with services sector leading to suboptimal job creation.
Pakistan faces several challenges in achieving economic security, including a large population, income inequality, energy shortages, fallout of Ukraine War, instability and weak governance, rising debt etc. However, the country has also made efforts to improve its economic situation through various reforms and policies. After extensive consultation with public and private stakeholders during the Turnaround Conference 2022 to turn Pakistan’s future around and move towards prosperity, the Ministry of Planning, Development & Special Initiatives came up with a 5Es framework to combat Pakistan’s socioeconomic issues in the short and medium term. It will be the beginning of a new era in addressing the five key challenges by opting multi-pronged strategies in key areas of the economy. Increasing exports receipts to earn foreign exchange and overcome slowdown in economic activities is on the top, followed by E-Pakistan initiative for emerging digital Pakistan economy, ensuring affordable & efficient use of energy resources, mitigating and adaptating climatic changes, taking youth-centric inclusive empowerment initiatives are some of the areas of focus and is the prime responsibility of the State.

 Review of Economic Performance during 2018-23

The landscape of macroeconomic indicators improved gradually during 2018-23. On average, GDP grew at 2.8 percent during this period. The inflation remained moderate during 2018-20 but it started increasing thereafter due to disruption in international supply chains which is the fallout of COVID-19 and Russia-Ukraine War, coupled with indigenous supply disruptions caused by floods of 2022 and import restrictions. In order to control inflation, the SBP maintained historically high policy rate during 2022-23 at 22%.

Pakistan is facing a persistent trade and fiscal deficits which have considerably increased public debt to an unsustainably high level. Due to low foreign exchange inflows and political
instability, Pakistani currency remained under pressure during the last five years and a substantial currency depreciation during this period contributed significantly to the inflationary and external sector pressures.

The table shows hostile macroeconomic environment and extraordinary efforts required to achieve the target. To meet the challenges, the Thirteenth Five Year Plan (2024-2025) will
provide a new direction as outlined in 5E Framework (addressing issues of Exports, implementing E-Pakistan, Investing in Energy and Infrastructure, addressing Environment and Climate change issues and promote Equity and Empowerment). The key objectives of the Plan have been formulated mindful of the resource constraints that the economy faces, the demands of the security situation and the need to immediately solve population explosion, while addressing basic structural fault lines that inhibit sustained economic growth.

Agriculture

On average, the agriculture sector grew by 3.0 percent during 2018-23. Its growth increased from 0.9 percent in 2018-19 to 4.2 percent in 2021-22. In the following year, scale of the disaster in the form of recent floods is unprecedented in Pakistan. Agriculture sector suffered the greatest damage and loss of around $13 billion due to floods of 2022. Crops contributed to 82% of total damage and losses in the sector, followed by livestock with 17% and fisheries/aquaculture with the remaining 1%. Owing to these factors, the agricultural growth went down to 2.3 percent in 2022-23. The sector on the whole suffered from low productivity generating sporadic growth in different years. The annual growth of the livestock subsector in the agriculture remained 3.7 percent during fiscal year 2022-23 which is attributed to private sector led investment and development.

Industry

Historically, the industrial growth has been considerably lower than its potential. The contribution of industrial sector to GDP increased slightly from 16.7 percent in 1999-2000 to 18.4 percent in 2022-23. Within the industrial sector, manufacturing contributes the most as its share was 64.5 percent of the industrial valued added and 12 percent of the GDP in 2022-23. The growth of industrial sector of the economy has varied over the period from as high as 17.2 percent in 2003-04. Although the textile sector contributes significantly to the Large Scale Manufacturing, however, the exports yet consist of low-value goods.
Over the last five years (2018-23), the industrial sector showed very sluggish performance. Industrial sector has faced many issues such as import restrictions made it difficult to import essential raw materials, intermediate goods and machinery. Moreover, increase in energy prices, higher cost of imported input due to currency depreciation, increased cost of working capital due to substantial increase in interest rates and political uncertainty adversely affected the industrial sector. The industrial sector during the past five years grew at 1.2 percent on average.
However, the initiative of Special Economic Zones (SEZs), both CPEC and non-CPEC, established across the country remains an attractive destination for the industry. The SEZs can further progress after certain structural reforms including linkages with upstream and downstream industries and IT interventions by streamlining the land allocation process and making it transparent and free from speculative activities.

Services Sector

The services sector makes up around 58 percent of GDP. Average annual growth rate of services sector for the period 2018-19 to 2022-23 was 3.3 percent as compared to average annual growth rate of 3 percent and 1.2 percent of agriculture and industry, respectively, highlighting its role as a major driver of economic activity and growth. Logistics and trading are considered the backbone in the services sectors; however, Pakistan’s performance of Logistics Performance Index (LPI) remained low.
The services sector has consistently outpaced other sectors in overall GDP growth over the past twenty-two years. Average growth in the services during period starting 2000-01 to 2022-23 was 4.6 percent in the overall average GDP growth rate of 4 percent over the same period, as compared to 2.6 percent and 4.5 percent average growth rates of agriculture and industrial sectors, respectively.

Investment & Savings

Investment-to-GDP ratio was 15.5 percent in 2018-19 and it declined to 14.1 percent of GDP in 2022-23 which posts an extremely concerning scenario. Many factors including import
restriction, high policy rates, exchange rate volatility, boom in real estate sector have discouraged the investment. It is noteworthy here that according to the World Bank’s Ease of Doing Business Report 2019, Pakistan ranks 136th out of 190 economies and ranked at 108 out of 190 countries in EODB 2020 report. However, improvement has been made in 2020, on six important pillars of the Doing Business Indicator. National savings were significantly below the investment rate, reflecting heavy external dependence. These were 11.3 percent of GDP in 2018-19 and improved to 13.2 percent in 2022-23.

13th Five Year Plan (2024-/25 – 2028/29)

The socioeconomic landscape in Pakistan has undergone significant changes due to severe macroeconomic imbalances. The economic environment for growth has experienced  fluctuations since the onset of COVID-19 in 2019-20, coupled with external uncertainties. Global commodity prices are on the rise, and many countries including Pakistan are implementing contractionary monetary policies. Pakistan is facing mounting pressure on its external balance, marked by increased imports and stagnant exports. The depreciation of the PKR has elevated the cost of servicing debt, contributing to a fiscal deficit, while revenue generation remains limited. Inflation is trending downwards due to decreasing food prices particularly wheat price and favourable base effect.
In this challenging economic environment, the primary focus of the Plan is to restore macroeconomic stability, address fiscal challenges, and work towards long-term sustainability and external sector solvency. Concurrently, the Plan will target addressing employment and skill mismatches in light of the emerging technologies of the fourth industrial revolution and poverty alleviation. Moreover, the Plan will also focus on identifying regional demands, globally growing sectors, and their specific product lines along with standards and compliance requirements.
The growth prospects during the Plan period are likely to be under significant pressure due to mounting energy prices, interest rates, inflation, debt repayments and the cost of doing business, as well as macroeconomic instability in the first year. The magnitude of this macroeconomic instability demands immediate attention, as it has the potential to hinder long-term growth and prolong economic difficulties if left unchecked. Macroeconomic stabilization is essential, and a domestically devised stabilization program with a humancentered approach is crucial at this juncture. Stabilization efforts must be balanced to ensure they do not stifle economic growth. The tax-to-GDP ratio in the country has never been more than 13%, whereas in FY 2022-23, it was only 9.3 percent. The main causes of low tax collection are the existence of a sizable informal sector, exemptions given to agriculture, housing sectors, loopholes due to presence of deductions and lack of capacity to audit the returns, loss of trade revenue, widespread tax evasion, unwarranted leniency towards nontaxpayers, and procedural problems in the tax collection system. Concrete steps must be taken in order to integrate this significant portion of undocumented sector into the ecosystem. Measures are inevitable to stop evasion, trade mis-invoicing, strict border controls to stop smuggling, increase tax compliance by making it mandatory for all individuals, included exempted sector under the taxation etc.
The government’s growth strategy is centered on strengthening the foundations of the economy, including the quality and inclusive economic growth, enhancing human capital, advancing technological capabilities, promoting sustainable agriculture, ensuring social protection, developing a strategic trade policy framework, increasing exports (reducing trade deficit), implementing a national SME policy, enhancing financial inclusion, improving productivity and efficiency, and establishing an investment strategy for optimal resource allocation. The careful design of these adjustments is critical, as a focus on enhancing fundamentals such as human capital quality, the business environment, export potential, and resource mobilization is crucial to sustaining the growth momentum.

Agriculture

The agricultural sector continues to hold a significant role in the economy, employing 37.4 percent of the workforce and contributed 23.2 percent to GDP in 2022-23. Research indicates that a one percent increase in agricultural growth can be twice as effective in reducing poverty compared to a similar increase in the non-agricultural sectors.

Being an agro-based country, Pakistan’s growth in industrial and services sectors is largely dependent on agriculture sector. However, this sector has not yet realized its full potential. Besides low yields, it faces challenges related to the degradation of natural resources. Technological advancements and climate conditions significantly influence agricultural production. Inefficient use of land and water resources further hampers productivity.
The level of public sector investment in agricultural research and development in Pakistan is considerably lower than that in neighboring countries. In addition to a lack of innovation, the limited dissemination of existing technologies hampers the modernization of agriculture and yield improvement. There’s a need to restructure and transform the agricultural production system into a dynamic and commercially viable sector. The products being produced in Pakistan naturally and/or through domestic raw materials, i.e., crops, fruits, livestock, mines & minerals, fish etc. need to be aligned with their global demand. Identification and development of value chains from processing to compliance of standards and new markets entries is a must step for a sustainable and pragmatic growth.
Funding constraints limit research stations, resulting in high production costs, low farm-level investments, and products misaligned with international markets. Addressing this necessitates the development of modern machinery services, public-private seed systems, quality input supply, balanced fertilizer use, and judicious pesticide application. Evaluating existing irrigation practices, demonstrating high-efficiency irrigation systems, and employing site-specific tillage and erosion control technologies are vital for achieving productivity targets.
The strategy outlined for agriculture growth in Pakistan places particular emphasis on the significant role played by the different subsectors, especially the crops and livestock sector. During the Plan period, enhancing overall productivity will involve developing new crop varieties and improving management practices. Increased investments in agriculture, both from the public and private sectors, can yield better results through reforms that enhance incentives for farmers and improve the institutional framework in which agricultural activities occur. Providing quality inputs like seeds, pesticides, fertilizers, and efficient irrigation water remains a top priority on the supply side. The primary goal of the Plan is to modernize and diversify the entire agricultural system through well-coordinated policy initiatives.

The livestock’s contribution to the nation’s foreign exchange earnings is accounted for around 2.1 percent of the country’s total exports. With private sector investment exceeding Rs 1,056 billion in poultry, and similar levels in the dairy and meat sectors, the livestock industry is generating employment opportunities for over 2 million people across Pakistan. Currently, with a stock of 220 million ruminants and 1.9 billion poultry birds, the sector supplies 55 billion liters of milk, 5.5 billion kg of meat, and 24 billion eggs to the country’s population of nearly 240 million.
Several challenges are being faced to the livestock sector includes policy level issues like price capping, livestock not being treated as agriculture; production level issues like poor genetic potential of dairy and meat animals, endemic transboundary animal diseases, and the prevalence of foot and mouth disease (FMD), which limits exports of meat products from the country to a few geographical destinations. It is added by irrational policies for production and import of major feed ingredients like soybean and other poultry items.
To improve Pakistan’s livestock sector for sustainable growth, actionable interventions can be made in several key areas, including policy reforms, investment, technology, and human
resources. 

The major initiatives for agriculture sector development under the Plan are as under:

•  Implementation of 4RF (Resilient Recovery, Rehabilitation, and Reconstruction Framework) for food and agriculture to recover and reconstruct agricultural sector.
•  Promoting e-extension services in agriculture sector and fostering the integration of information and communication technology (ICT). Leveraging digital technologies for the modernization of farming practices, including the adoption of precision agriculture, digital crop monitoring, and e-marketing platforms to connect farmers with markets more efficiently.
•  Infrastructure development in agriculture to focus on improving irrigation systems, upgrading transportation networks for efficient supply chains, and enhancing storage facilities. Additionally, there will be efforts to promote the use of renewable energy in agriculture, such as solar-powered irrigation systems.
•  Access to credit, education, and agricultural extension services will be enhanced and a modern seed industry will be established in the private sector.
•  Provision of subsidies to small farmers and utilizing IT-based solutions to ensure effective and targeted subsidy distribution.
•  Skill development, biotechnology, farm mechanization, financial support, and modern technologies will be employed to enhance the efficiency of land, water, and other inputs. Efforts will be made to introduce technologies and practices to enhance the sector’s ability to withstand future shocks, whether they are related to climate change, natural disasters, or other challenges. The reinforcement of National Agricultural Research System (NARS) will support leveraging new technologies for enhanced productivity.
•  Saline agriculture will be explored, and public-private partnerships will be promoted to maximize land and water productivity.
•  SIFC will attract both domestic and foreign investors to augment agricultural productivity, establish job opportunities, and boost economic growth by corporate farming.
•  Land Information and Management System-Centre of Excellence (LIMS-CoE), an initiative aimed at Green Revolution, is expected to utilize 9 million hectares of uncultivated land. It will ascertain Foreign Direct Investment in the agriculture sector in Pakistan.
•  Small farmers facing a decline in agricultural productivity as a result of their limited resources will be converted into productive units through cooperative farming with the involvement of the private sector.
•  Enhancing agricultural exports through strategies to improve the quality and competitiveness of agricultural products in the international market. This will include promoting value addition, ensuring compliance with international quality standards, and exploring new export markets for agricultural goods.
•  Strengthening the production of agricultural inputs, particularly seeds, pesticides, fertilizers, and agricultural machinery. Furthermore, quality control mechanisms for pesticides and food items will be strengthened.
•  Upgradation of livestock sector’s status to industry to avail the benefits similar to other agriculture subsectors where electricity tariffs shall be reduced, bank loans will be availed with low-interest rates and exemption of taxes and duties on import of poultry seed in the form of the grandparent (GP) and poultry raw material.
•  Similar to poultry, deregulation of milk and meat prices to create a fair, enabling, and business-friendly environment for private sector investors.
•  Rationalizing the production and import regulations for maize and soybean as major feedstuff of animal and poultry feed.
•  Permitting export-oriented meat processors to compete in the domestic market on a level playing field and devise policy for minimum slaughtering weight of animals at retail and export abattoirs.
•  Local vaccine production, digitization of animal disease tracking, reporting and response system and development of disease-free zones through national control programs for Transboundary Animal diseases (Foot and Mouth disease and PPR).
•  Finalization of national poultry policy through AHC for its broader implementation on the entire poultry sector of Pakistan. 
• Initiating genetic improvement program in dairy and meat sectors through improved reproductive technologies, i.e., development of sexed semen and embryo transfer technologies, Promote the Soybean production in land, promote commercial feedlot for meat export enhancement and Include livestock related corporate enterprises in Green Pakistan Initiative (GPI) for converting range land into agriculture cultivable land.
•  Application of e-commerce to livestock trade and input supplies marketing involving young graduates and private sector through a regulatory framework.
• Pakistan’s commitment to a 30 percent reduction in methane emissions is a significant contribution to the global fight against climate change, recognizing the potency of methane as a greenhouse gas. This pledge necessitates an increase in productivity in our vital livestock sector per unit of methane emission, which is achievable through the application of efficient breeding practices, improved dietary regimes, and effective manure management strategies.
• Utilization of high saline water land for aquaculture and fisheries development, promotion of shrimp farming and support to private sector for technology transfer and capacity building activities for aquaculture production. 

Industry

The industrial sector of Pakistan is facing various issues. The level of FDI is low due to
unconducive business environment that leads to lower profitability. Overall regulatory and
policy regime is weak, inconsistent, cumbersome, low value added and uncompetitive
products create low export competitiveness. Lower productivity, inefficient management,
technical as well as X-inefficiencies are another serious issues. Unavailability of raw material
and other inputs, inadequate infrastructure, complex taxation system and poorly designed
energy/tariff policies, market and product diversification constraints, unskilled & semiskilled human resource, lack of innovation / R&D and limited access to credit are other issues
faced by this sector.
In 2014, Pakistan was granted EU GSP+ status for a ten-year period, allowing duty-free access
to more than 6,300 tariff lines. Between 2013 and 2019, Pakistan’s exports to the EU
increased from US$ 6.8 billion to US$ 9.7 billion. But over this time, Pakistan’s market share
has stayed same, barely accounting for 0.16% of all EU imports. However, the engineering
industry1 generated significant money by introducing cutting-edge technology, and engaged
educated and skilled youth.
The SEZs offer the Pakistani industrial sector an opportunity for modernization and increased
efficiency and competitiveness. This potential is visible in the fact that SEZs are a linchpin for
Industrial Cooperation under China-Pakistan Economic Corridor (CPEC) aimed at realizing
the dividends of the early harvest CPEC projects of energy, infrastructure and
communication. The challenges hindering industrial growth can be addressed through
energy projects, infrastructure enhancements, and the development of Special Economic
Zones (SEZs) on economic principles. A noteworthy endeavor may be a change in total factor
productivity and competitiveness index for sectoral assessment. This will help with the
creation of export readiness reports, business and investment climate indices, cluster
mapping, and other related projects. Process management, product development,
technological innovation, standardization, entry into emerging markets, sustainable growth,
and job creation are all aided by these indices.
The Plan aims to expedite the growth of the industrial sector, capitalizing on the ample labor
force, improved productivity, production efficiencies, competitiveness, expanded trade and
better market access. Following are some of the proposed policy initiatives to meet the
growth targets in this sector:

 To bolster industrial competitiveness and productivity, focus will be placed on
developing a skilled workforce and removing technical and X-inefficiencies.
 Strong connections will be established between domestic and international
academic and research institutions and the industry for fostering research and
development. This integration will help enhance existing technologies and create
new and innovative solutions to meet the evolving demands of the industry, thus
enhancing its global competitiveness.
 Measures will be taken to create a conducive business environment. This will require
simplifying procedures such as access to financing, developing industrial
infrastructure, and implementing tax and procedural reforms.
 The non textile sector do not put pressure on imports therefore, ample focus may be
given to promotion of non-textile industrial sector.
 Skill mapping and development of workforce especially for SMEs with a focus on
enhancing competency, quality and employability of the workforce to enhance its
share in exports.
 A vibrant and dynamic National Industrial Policy and consistent allied policies will be
formulated to provide a comprehensive framework for industrial transformation.
The policy would focus on creating broad-based capabilities in new technologies,
product and process innovations, market development, strategic coupling of
domestic firms with global production networks especially Chinese companies,
transfer of technology, ensuring an uninterrupted supply of electricity and gas,
rationalizing taxes and easing of regulations.
 Facilitating innovation and R&D to make the industrial processes efficient and
facilitate the development of product space leading to diversification and
augmenting productivity via value addition and technology upgradation/ relocation.
 Formulating investment promotion policies and plans to channel both domestic and
FDI in export-oriented sectors. Additional incentives for FDI will be introduced by
improving the ease of doing business, development/upgradation of industrial
infrastructure, addressing governance issues, and fostering an environment that
builds confidence for foreign investment.

 The Plan would focus on simplification and reduction of business interfaces with
regulatory, tax and approving authorities to improve the ease of doing business,
which is a pre-requisite for promoting manufacturing. Pakistan Regulatory
Modernization Initiative (PRMI) will be rigorously implemented to eliminate
cumbersome and unnecessary regulatory requirements and create a simple,
transparent and online business-friendly regulatory environment.
 Leveraging CPEC and non-CPEC industrial zones and Special Economic Zones (SEZ)
and transforming them into hubs of value addition and economic activities. Special
Economic Zones (SEZs) on low-cost land with plug-and-play facilities will be
developed across the country in consultation with respective Provincial
Governments to create investment opportunities. In this context, development
options like PPP/JVs will also be explored. Another important step will be establishing One Stop Service for SEZs to provide time bound public services in SEZs in particular
and the country in general.
 The Plan strongly recommends evolving a strategy for boosting up SMEs sector to
bring improvements in legal framework, provide support through institutional
framework, conduct sector development studies, enhance access to financial
resources, create enabling environment for women & youth entrepreneurs, promote
businesses through online portal and develop workers’ skills through tailor-made
courses, etc.
 The Plan recommends efficient utilization of the country’s geological endowment
and mineral potential with emphasis on harmonizing right mineral policies,
appropriate institutional mechanisms and skill development.
 Leveraging relocation of industrial supply chains leading to increased labour
productivity, growth, and capital deepening with special focus on CPEC that can
provide an avenue for transfer of technology and spillovers from China in high-end
manufacturing.
 In order to stay relevant and productive in the face of changing global context,
Pakistan’s manufacturing strategy will incorporate features of the fourth industrial
revolution. The fourth industrial revolution focuses on incorporating advanced
manufacturing techniques and digital technologies into production processes with
the aim to transform old manufacturing lines into smart factories. 

 The manufacturing industry needs to switch to automation and new production
techniques. The Plan would seek to promote investment in new and non-traditional
ventures that encompass more information technology and communication to
broaden the industrial base.
 The private sector (firm level) should be the starting point for the concept of smart
factories in order to achieve impactful standardization, productive production, and
effective resource management—all of which will draw in new markets.
 The Plan would devise mechanisms for developing academia-industry collaboration
to initiate industry funded research and development projects to promote
innovation, technology upgradation, industrial diversification, introduction of new
technology and modernization of agricultural sector. To determine the skill gap
between what we are creating and what the regional need is, a thorough
investigation is strongly advised. In addition, our curriculums and skill trades should
be in line with global standards so that we may export our skilled workforce to
objective-based labor markets.
 Development of high-skilled and well-trained human resources will be focused to
create more employment opportunities with quality jobs through industrialization.

Services

Over the next five years, the services sector is anticipated to undergo accelerated expansion,
primarily fueled by the implementation of CPEC projects. Sub-sectors such as transport,
storage, and communication are poised for rapid growth, especially with Gwadar port acting as a pivotal trade and transit hub. This development is expected to boost overall GDP and
specifically enhance the prospects of transport, storage, and communication.
Any upswing in agricultural and manufacturing activities is projected to translate into
increased growth in retail and wholesale trade. Presently, the services sector faces
challenges such as low value addition, a stagnant share in total output, low service exports,
a high trade deficit in services, and limited financial and digital literacy, compounded by low
banking and broadband penetration. E-commerce saw a boom during COVID-19, and
consequently, the service sector in Pakistan has enhanced its outreach within and outside of
the country. However, the inclusion of online payment systems like PayPal in our existing
financial system needs to be addressed to accelerate this platform.
A fundamental structural issue within the services sector is market saturation, potentially
hindering its contribution to national output. To extract economic benefits from the service
sector, there must be a focus on real value addition to the overall economy. Connecting the
services sector with other key sectors and fostering innovation within it are crucial to making
it a leading contributor to the external sector and combating premature de-industrialization.
Despite being the largest sector, services do not proportionately contribute to the overall
external sector. The need for policy initiatives to boost services exports in the next five years
is evident, especially by exploring growth avenues in software development, freelancing,
and tourism, while ensuring proper documentation for increased taxation.
Prudent policymaking can strengthen wholesale and retail trade, with improvements in the
security situation contributing to the burgeoning tourism industry. A liberal visa regime is
anticipated to significantly increase foreign tourist numbers, driven by recreational,
adventure, business, government, and religious tourism. Domestic commerce contributes
nearly 41 percent to GDP and employs a sizeable portion of the labour force. The first ever
draft Domestic Commerce Policy covers a wide range of key areas including enterprise
productivity and modernization, SME/firm development, retail and wholesale sector
development, local brand development, transportation, storage and warehousing, and skill
development, etc.

Investments in infrastructure, such as new roads, expanded railway tracks, and the
functioning of Gawadar port, are expected to have positive spill-overs on transport, storage,
and communication. The establishment of IT parks, combined with the government’s focus
on enhancing computer and IT literacy, will position Pakistan as a new hub for software and
hardware. The key policy initiatives include:
 Harnessing the potential of hospitality business and tourism, as improved security
makes this a new growth area.
 Economy-wide digitization to tech-literate people so they can benefit from increased
importance of hi-tech industry and economy.
 Harnessing the prospects of software exports along with new potential export
markets.
 Exploiting the potential of growth of freelancing industry from $1 billion to at least $
5 billion.
 Expanding the broadband penetration, which still remains low in Pakistan, for
wholesome digitization in economy.

 Finally, widening and broadening the accessibility of financial institutions in the
economy to bank the unbanked populace will be pursued. Timely digitization, in this
regard, can play a major role.
 Implementation of Domestic Commerce Policy for retail and wholesale sector
development
GDP Growth targets for 2024-25 to 2028-29 for overall GDP as well as agriculture, industry
and services sectors are presented at Annex-I.

Investment & Savings

The public sector will support and encourage private investment and growth by
concentrating on enhancing skills, technological capabilities, industrial infrastructure,
financial resources, and, most importantly, cultivating a favorable environment for private
sector investment. The government’s role will be that of a facilitator and regulator for private
businesses and enterprises. As international markets are expected to improve, Pakistan has
the potential to reap benefits by focusing on external opportunities. GSP Plus status was
awarded in 2014; however, Pakistan could not even excel its export performance by
attracting high-value goods, e.g., engineering sectors, technical textiles, fruit processing, etc.
These are attractive areas where Pakistan can clinch huge foreign investment in the form of
joint ventures, business equity share-holding, and brand development. In this regard,
professional marketing firms may be hired in key export markets/region of Pakistani
products to improve the country’s image. Moreover, brand development requires heavy
marketing and R&D budget which may be facilitated by the Government. Another key step
may be to engage exporters with foreign trade attaches to identify “vertical and updownstream” partners in global export target markets Devising strategies to unlock
domestic markets and entrepreneurship can be advantageous for the country. Moreover,
the current low oil prices present a favorable environment for Pakistan to increase both
public and private investment within the nation.
Recognizing the significance of maintaining macroeconomic stability, Pakistan can position
itself to become a part of global value chains (GVCs) by concentrating on making the import
and export of intermediate inputs attractive and viable for industries. Joining GVCs will lead
to higher exports and increased foreign investment. The ongoing implementation of the
China-Pakistan Economic Corridor (CPEC) is eliminating obstacles to the supply side, and a
substantial increase in Foreign Direct Investment (FDI) and other external fianncing is
expected to further bolster overall investment during the Plan period. With these
considerations and higher growth of public investment, the projected investment level is
expected to reach 17.6 percent of GDP by 2028-29 (Annex-II). Similarly, national savings will
be enhanced to 16.1 percent of GDP in the terminal year.

Another weak area on which the plan will focus is the creation and management of data
banks pertinent to important resources available in Pakistan. For instance, mines and
minerals, gems and jewelry, high-value fruit processing, etc. Such data banks and their
updates always become the first step in attracting result-based FDI.
To address the economic priorities in the face of changing global and regional economic
scenarios and to achieve the targets for sustainable economic growth in the country revision
of Investment Policy 2013 was carried out, in consultation with federal and provincial stakeholders and Pakistan Investment Policy 2023 was formulated which was approved by
the Federal Cabinet in July, 2023. The over-arching strategy of the Investment Policy is to
establish Pakistan as a destination of choice for Foreign Direct Investment (FDI) in the region.
which could enhance Pakistan’s participation and contribution in Global Value Chain and
focusing on high-quality export-oriented and efficiency-seeking investments. The aim is to
boost investor confidence and further liberalize investment activities and to enhance the
investment climate by improving ease of doing business, simplification of business
regulations / procedures, investment promotion, investor retention and facilitation, investor
protection, grant performance and location base incentives and sector focus in the country.
The objectives of Investment Policy 2023 include addressing economic imbalances,
achieving sustainable and inclusive economic growth, and increasing the investment-to-GDP
ratio. The investment policy will be complemented by an Investment Promotion Strategy /
Action Plan for the next five years, guiding FDI to align with the objectives of the investment
policy. The Investment Policy will be reviewed periodically to address economic imbalances,
achieving sustainable and inclusive economic growth, and increasing the investment-to-GDP
ratio.
Other policy measures like Pakistan Regulatory Modernization Initiative (PRMI) is also being
undertaken to eliminate, critically analyzed, simplify, reengineer, improve, and digitalize
business registrations. licenses, certificates, other permits, and regulatory requirements,
which aims to improve businesses climate in the country by simplifying regulatory
framework and procedures to reduce compliance burden on businesses. Furthermore, the
Government under the “Economic Revival Plan” has constituted the “Special Investment
Facilitation Council (SIFC)” to act as Single Window for facilitation of investment, and
development of an enabling business environment. Framework Agreement on Industrial
Cooperation under CPEC singed between Board of Investment and National Development
and Reform Commission of the People’s Republic of China provides comprehensive roadmap
for fortifying the export-oriented industrial base with the China’s support. 

Historically, sustainable domestic growth has proven elusive for Pakistan. High growth
periods have often relied on substantial foreign aid. The 13th Plan aims to break this
dependency pattern by emphasizing the importance of high saving rates, promoting exports,
and replacing certain imported items that could be produced more efficiently within the
country.

1.2 Achieving Balance of Payments

1. Introduction

Pakistan’s economy has been facing multifaceted challenges both on internal and external
fronts. Notably, Pakistan’s economy is balance of payments constrained at growth rate of
3.77 percent per annum.2 Therefore, a sustainable balance of payments position is critical
for ensuring macroeconomic stability. To meet such requirements a competitive and
dynamic external sector is required that is capable of generating robust growth in export
earnings to maintain a viable balance of trade. The financial account needs strengthening
by diversifying sources of financing with greater recourse to non-debt creating sources of
financing like export-oriented FDI to ensure external debt sustainability.

2. Review of 2018-23

The economy went through some unprecedented shocks one after another especially in last
five fiscal years posing a plethora of threats to hard earned macroeconomic stability by
ultimately compromising it. At the end of FY18, the external sector recorded unsustainable
level of current account deficit i.e. US$ 19.2 billion, leading to decline in foreign exchange
reserves and paved way to enter into IMF’s 23rd Extended Fund Facility (EFF) during FY19.
The stabilization efforts were in action when in the 2nd half of 2019-20, the global economy
was hard hit by COVID-19 pandemic and Pakistan was not exception to it. The economy
started to recover followed by global recovery leading to rise in demand and driving up
prices of global commodities which further exacerbated by Russia-Ukraine conflict. Along
with facing these global challenges, the economy had to confront with domestic economic
policy missteps, political instability and unprecedented floods 2022. The strong economic
recovery in FY22 along with these factors lead to another high-level current account deficit
of US$ 17.5 billion leading to stabilization and IMF’S Stand By Agreement (SBA) at the end of
2022-23.
Together these factors contributed in significant imports bill of US$ 71.5 billion during 2021-
22. Pakistan’s external sector woes re-surfaced thus recording a very high current account
deficit during 2021-22 despite historical inflows in exports and workers’ remittances in the
same year.
In the start of 2022-23, when the economy was already facing issues on external fronts and
contraction was in action to ensure stability, unprecedented floods 2022 exacerbated the
situation further. Overall damages are estimated at PKR 3.2 trillion (US$14.9 billion),
equivalent to 4.8 percent of GDP. The remittances through official channels witnessed
decline during the year. However, as a result of significant decline in imports compared to
exports and remittances combined, the current account deficit shrunk to US$ 3.3 billion
during FY23 compared to US$ 17.5 billion in FY22.

Financial account inflows could not keep up pace with current account deficit in three year
of the period – recording outflows in the terminal year – mainly on the account of declining
non-debt creating inflows i.e. foreign direct investment, outflow of portfolio investment and
increase in amortization payments over the period. Together these factors led to decline in
foreign exchange reserves of the central bank to US$ 4.5 billion at the end of 2022-23.
Foreign Direct Investment decreased from US$ 2.8 billion in 2017-18 to US$ 0.7 billion in
2022-23. Portfolio investment also recorded outflows during the period under review mainly
on account of payment against the maturity of bonds.
However, both disbursement and amortization increased during the period. Decline in
foreign exchange reserves during the period created pressures on local currency and Pak
rupee depreciated by 56.2 percent from PKR 110.4/US$ in 2017-18 to PKR 252.1/US$ in
2022-23. Real Effective Exchange Rate (REER) depreciated from 107.3 in June 2018 to 87.7
in June 2023 indicating the background of currency depreciation over time.

3. 13th Five Year Plan (2024-29)

Sectoral Issues

The 13th Plan is presented in the backdrop of a substantial current account deficit and
declining foreign exchange reserves. Pakistan’s external sector is facing several issues, such
as consumption-oriented growth rather than export-led growth, re-surfacing of balance of
payments woes, lack of exports diversification, decline in export to GDP ratio from 12
percent of GDP in 2010-11 to 8.2 percent of GDP in 2022-23, heavily reliance on energy
imports, and fluctuations in global energy prices significantly impact the country’s import
bill, leading to trade imbalances.

Despite being an agrarian economy Pakistan is a net food importing country. Moreover,
structural obstacles, such as a lack of economic diversity and regulatory burden, hinder
exports’ competitiveness in the global market. Weak Compliance SPS and TBT standards and
utilization of import tariffs for revenue generation has led to detrimental consequences,
particularly impacting the competitiveness of the manufacturing sector, especially in terms
of export-oriented activities. Additionally, market access obtained through Free Trade
Agreements (FTAs) could not be exploited fully to enhance exports. The Carbon Border
Adjustment Mechanism (CBAM) of EU, aiming to achieve net-zero greenhouse gas emissions
by 2050 under Green Deal initiative is a key policy challenge. Similarly, limited access to
Pakistan international payment gateways and poor development of e-commerce sector,
along with its regulatory and legal frameworks.

Objectives

The primary objective of 13th FYP is to ensure stability in short term and sustainability in the
medium to longer term by reviving the external sector. The Plan’s economic growth targets
will require funding from the external sector, with a balance between debt and non-debt
financing to generate inflows. Although both exports and imports are expected to grow, the
trade deficit-to-GDP ratio will keep on declining from 7.3 percent in FY23 to around 5 percent
in FY29. The overall BOP would be sustainable over the Plan period by limiting the CAD within
manageable range.

Targets

The Plan presents a road map for higher increase in exports through product sophistication,
product & market diversification, besides integrating the domestic production with global
value chains specifically in 11 sectors as determined in Strategic Trade Policy Framework
(STPF) 2020-25. Research & development, technology up-gradation, value addition and
branding are essential steps planned towards product sophistication and diversification.
Considerable surge in FDI and technology transfer will take place on the back of planned
Special Economic Zones (SEZ’s) industrial cooperation under CPEC and SIFC Initiative. It will
help in moving up the value chain through joint ventures with Chinese and other countries’
firms and hence increase in exports of value-added goods.

Policy Intervention/Programs and Initiatives to Reinvigorate Trade
Sector under 13th FYP

The 13th Five-year Plan envisages comprehensive strategy to reinvigorate trade sector to
generate higher foreign exchange earnings. To address the economic challenges faced by
the country, 5Es (Exports, E-Pakistan, Equity & Empowerment, Energy & Infrastructure and
Environment & Climate Change) Framework to turn around Pakistan, inter-alia, highlighted
three important channels to focus on i.e. exports, workers’ remittances and foreign direct
investments (FDI). External sector reforms are vital to a comprehensive development
strategy, promoting economic resilience, ease of doing business and global competitiveness.

Structural Reforms

External sector reforms play a crucial role in the overall economic development of a nation.
Pakistan can leverage global markets, expand its trade portfolio, and enhance growth opportunities. Additionally, the focus of structural reforms would be to facilitate the transfer
of technology and knowledge sharing, stimulating innovation and strengthening industrial
capacity.
In order to address lower exports growth in Pakistan, the Ministry of Commerce (MOC) has
prepared the Strategic Trade Policy Framework (STPF) 2020-25 that aims to enhance export
competitiveness of Pakistan through a framework of interventions having an impact across
the value chains. STPF identified eighteen (18) priority sectors which have been bifurcated
into seven (07) traditional and eleven (11) developmental Sectors comprising of Engineering
Goods (incl. Auto Parts), Pharmaceutical, Marble & Minerals, Processed Food & Beverages,
Footwear, Gems & Jewelry, Chemicals, Meat & Poultry, Fruits & Vegetables, Sea Food,
Services Sector (Special focus on IT, Transport, Logistics & Tourism). Various measures have
been envisaged to enhance exports of these sectors.

The 13th Five-year Plan envisages the following strategies to improve overall composition
of trade in Pakistan.
 Ministry of Commerce has formulated National Priority Sectors Export Strategy
(NPSES), with a focus on 10 out of 18 priority sectors which aims to enable and
sustain a new cycle of export growth for Pakistan, exploiting its vast untapped
potential for trade and investment development.3
 Doubling up the productivity by introducing major interventions under a
comprehensive National Productivity Master Plan (NPMP) developed through
assistance of Asian Productivity (APO) and Korean Development Institute (KDI).
 Reforming Intellectual Property Rights (IPR) regulations to attract FDI and promote
indigenous innovation.
 Developing export clusters, facilitating Micro, Small and Medium Enterprises
(MSME’s) to establish their businesses, to enhance their production capacity and
develop linkages to global markets.
 Developing linkages of academia with private sector to promote research and
development in manufacturing sector.
 Increasing share of value-added products in the export basket, currently dominated
by primary and intermediate products.
 Value creation through designing and branding.
 The Trade Development Authority of Pakistan (TDAP) is mandated to foster and
advance exports. As per STPF the MoC has assigned action specific tasks to TDAP for
improving the export environment.

Measures to Improve Trade Balance

To address trade balance issues and foster export culture in the next five years the following
steps will be taken by different stakeholders.
 In order to promote outward orientation and eliminate the anti-export bias, tariffs
will be rationalized in accordance with the National Tariff Policy 2019-24.
 Road and rail infrastructure will be further strengthened for quicker and hassle-free
movement of goods from production centres to ports.
 In order to promote exports of perishable goods such as fish, horticulture, and
floriculture, the government will facilitate the establishment of cold storage facilities
on a public-private partnership basis at airports and seaports.
 As envisaged in STPF 2020-25, the Trade Related Investment Policy Framework will
be developed on the basis of broader principles outlined therewith to promote
investment in export-oriented sector and competitive import substitution.
 Efforts will be made to provide regionally competitive inputs to export oriented
sectors.
 To provide a favorable and liquid business environment, all refunds will be brought
under the FASTER system.
 The performance of the Export Development Fund (EDF) provides lessons on the
need to develop an integrated export strategy.
 Compliance of standards which include convergence of local and international
certifications, protection of intellectual property rights, and efficient and effective
dispute resolution mechanism, will be ensured. In this context, Ministry of
Commerce & Textile will devise a comprehensive roadmap in coordination with
Federal Board of Revenue and Ministry of Industries and Production.

 Concessions granted under Free Trade Agreements (FTAs) will be appraised in terms
of their impact on bilateral trade and, thereafter, reviewed/renegotiated accordingly
by Ministry of Commerce.
 New trading arrangements would be negotiated/made with utmost care to protect
local industry and focus on market access for value added goods and not merely
commodities.
 Establishment of special livestock farms for meat, milk, and dairy products along the
CPEC routes in rural areas has enormous potential to increase exports to China. In
2022, China’s total food and agricultural imports reached a record US$218 billion,
compared to its agricultural exports of US$ 70 billion making China the largest net
importer of food and agricultural.4 Food safety standards will be implemented to
meet international market requirements. The Ministry of National Food Security &
Research will establish a one-window operation in consultation with the provinces
and other stakeholders and develop guidelines to assist investors in establishing
special livestock farms.
 Through the whole of government approach including the Provincial Governments
and with the support of private sector stakeholders, agriculture sector will be
modernized through mechanization. Through the Land Information and
Management Systems, modern agriculture farming initiatives are being introduced
in over 4.4 million acres of land, including 1.3 million acres each in Punjab and Sindh,
1.1 million acres in Khyber Pakhtunkhwa, and 0.7 million acres in Balochistan.

 Pakistan’s current GSP+ status which is going to expire in December 2023, has been
voted to extend to another four years, until 2027, for developing countries, including
Pakistan by the EU Parliament. This will provide an opportunity to Pakistani exporters
to enhance earnings and meet the Plan target.
 By adopting advanced planting and harvesting methods and using better quality
seeds, the yield per acre of agricultural products in Pakistan is expected to increase
significantly.
 Edible oils make up about 1/3rd of food imports. Their cultivation will be encouraged
in the country through various initiatives. Pakistan Agricultural Research Council
(PARC) will make special arrangements in this regard in co-ordination with the
provincial governments.
 Yield and quality of domestic cotton needs to be significantly improved to
reduce/eliminate reliance on imported cotton and increase the share of domestic
value added in textiles and apparel exports. Production of Cotton and pulses will be
encouraged through the Agricultural Development Policy to reduce imports and save
hard-earned foreign exchange.
 Currently, Pakistan’s textiles and apparel exports are largely concentrated around
cotton-based products. Polyester staple fiber (PSF) is the basic raw material for manmade filaments (MMF) and synthetic textiles. Efforts will be made to increase
production of MMF & synthetic textiles for the domestic market – without a domestic
market for MMF & synthetics, these products cannot become competitive enough
for export.

Trade in Services

The global importance of trade in services is growing due to advancements in information
technology and the expansion of global value chains. For developing countries like Pakistan,
enhancing trade in services can significantly improve their participation in international
trade and bring numerous benefits. To support this, Pakistan’s Commerce Division is setting
up a Services Trade Development Council (STDC) and a Trade in Services Wing aimed at
promoting domestic liberalization and boosting service exports through sectoral reforms.
Ministry of Information Technology & Telecommunications has introduced an “IT and IT
enabled services Export Strategy” to establish Pakistan as a global IT hub, with a target to
increase IT/ITeS export revenues to $10-$18 billion by 2028. The Special Investment
Facilitation Council (SIFC) has been instrumental in enhancing the sector by addressing
bureaucratic hurdles. The growth of the IT/ITeS industry is expected to have positive ripple
effects on other sectors such as e-commerce, financial services, and public services (eGovernment). Comprehensive training and skills development initiatives are planned to
support this growth. Moreover, international payment gateways are being engaged to
support freelancing communities. With Pakistan’s rich culture and scenic landscapes,
coupled with an improved law and order situation, there is significant potential to boost the
tourism sector’s exports as well.

Trade Diversification

Expanding export markets and exploring new trading partners is crucial for mitigating
economic vulnerabilities and promoting sustainable international trade. According to the
Atlas of Economic Complexity Rankings in the year 2021, Pakistan ranked at 94th position.5
Pakistan needs to catch up in terms of economic complexity, and efforts are needed to
expand into more sophisticated industries and overcome infrastructural and governance
obstacles for sustainable growth. To improve its exports, the plan aims to use more
advanced technologies in the production of goods, resulting in more diversified products.
This will increase the share of value-added products in the export basket, which is currently
dominated by primary and intermediate products.

Trade Facilitation

Trade facilitation will help to increase the volume of trade. Since the formal accession to the
WTO Trade Facilitation Agreement in 2017, extensive trade facilitation reforms have been
implemented. The most significant is the establishment of Pakistan Single Window (PSW),
which is an Integrated Digital Platform that allows parties involved in trade to lodge
standardized information and documents. As a result of these reforms, Pakistan has
considerably improved its ranking in the World Bank Trading Across Border Index (from
142nd to 111th). There is still significant space for the improvement in trade facilitation
compared to peer emerging economies, therefore, the necessary steps will be expedited by
the relevant agencies.
Moreover, the necessary policy measures would be strengthened so that the Pakistani
exporters could meet the requirements of Sanitary and Phytosanitary (SPS) standards and
Technical Barriers to Trade (TBT).

Strengthening of Export Financing – EXIM Bank

To gradually phase-out SBP’s export financing scheme, EXIM bank has recently been
operationalized to facilitate exporters and boost exports. It is expected that the
operationalization of Exim Bank will provide one-stop facilities for the exporters for availing
comprehensive export loan and guarantee/insurance services.

Regional Trade

Globally the importance of regional trade is recognized as it is cost effective. However, South
Asia’s regional trade share is less than 5 percent whereas the global average is over 40
percent. The Plan to have greater focus on regional integration will promote trade and socioeconomic development of the country. After signing of the investment-related part of the
FTA with the Gulf Cooperation Council, it is expected that the negotiations on the remaining
areas of FTA will be concluded in the near future. It will be helpful in enhancing Pakistan’s bilateral trade and fetching investment from GCC countries. Pakistan will also be looking at
other options such as joining the Regional Comprehensive Partnership Agreement (RCEP),
which is the world’s largest free trade bloc, comprising 10 ASEAN countries along with China,
Japan, Australia, New Zealand, and South Korea.

Global Value Chains

About 70% of current international trade is through global value chains (GVCs), involving the
cross-border movement of services, raw materials, and various components. Pakistan has
one of the lowest GVC participation rates globally. By adopting a more outward-oriented
development strategy, Pakistan’s exports could grow significantly. To increase Pakistan’s
participation in GVCs, necessary reforms including tariff and trade facilitation (as discussed
above) will be implemented during the Plan period.

Tariff Rationalization

The imposition of higher tariffs on imported raw materials, intermediate goods, and
machinery has escalated input costs. The persistent high levels of tariff protection have
resulted in inefficiencies within the manufacturing industry. Furthermore, the elevated
tariffs have induced an anti-export bias, making domestic markets more attractive than
global ones. The complexity of the tariff structure, characterized by multiple duty slabs, high
tariffs, concessionary Special Revenue Orders (SROs), and regulatory duties, has created a
convoluted system. This complexity, coupled with frequent regulatory duty impositions, has
fostered inconsistencies and unpredictability, hindering investment decisions. The overall
impact includes increased incentives for smuggling, under-invoicing, and mis-declaration of
goods, further exacerbating the challenges faced by the manufacturing sector.
Over the past two decade, the 20 economies experiencing the most rapid export growth
have consistently lowered import tariffs, contrasting with the situation in Pakistan, where
there has been a notable 11% increase in import tariffs. Moreover, the imposition of
regulatory duties has further elevated the effective tariff rates. Presently, Pakistan holds the
highest average weighted tariff among the 70 countries with annual exports exceeding US$
20 billion. Addressing these concerns requires proactive measures and strategic
interventions. Ministry of Commerce has developed a National Tariff Policy 2019-24, which
aims at making the tariff structure a true reflection of trade policy priorities rather than as a
revenue generation source.

Trade Diplomacy and Image Building

Considering the important role of trade diplomacy in getting greater market access and
foreign investment, many countries have merged the Ministries of Commerce and Foreign
Affairs. There is a need for closer collaboration between the relevant ministries,
organizations, and economic entities involved in trade and diplomacy. A coordinated
framework is being developed to address trade and investment matters while considering
supply-side issues and market analysis. Moreover, endeavours to improve Pakistan’s image globally will be further strengthened. In this regard, Pakistani consulates and diplomatic
missions abroad will play a proactive role in marketing Pakistan as a land of opportunity,
highlighting its comparative and competitive advantages as well as projecting a positive
image of the country. Furthermore, missions will also mobilize the Pakistani Diaspora to
undertake productive investment in Pakistan. Special Economic Zones, Export Processing
Zones, Industrial Parks, and other specialized infrastructure being created to encourage
investment and improve returns. Also, the government under SIFC is assigning specific
targets to the trade and investment officers (TIOs) to promote foreign direct investment
projects, expansion and diversification of exports and enhance their role for better trade
diplomacy.

E-Commerce initiatives

The E-Commerce sector in Pakistan has experienced rapid growth in recent years. This offers
a pathway for entrepreneurs in Pakistan to transcend traditional trade channels and access
global markets, as internet-based enterprises can operate on a small scale. Research
indicates that Micro, Small, and Medium Enterprises (MSMEs) utilizing e-Commerce
platforms are approximately five times more likely to engage in export activities compared
to those in traditional economies.
In 2019, the Ministry of Commerce launched the country’s first-ever e-commerce policy. The
policy aims to promote e-commerce by providing guidelines on various key components.
Furthermore, the State Bank of Pakistan has introduced a new regulatory framework aimed
at facilitating Business-to-Consumer (B2C) e-Commerce exports from the country. Under
this framework, the mandatory ‘Export’ (E) form requirement has been eliminated, allowing
exporters to send goods up to USD 5,000 per consignment without the need for the ‘E’ Form.
This move is designed to streamline and simplify the export process, particularly benefiting
small entrepreneurs and exporters who deal in smaller quantities of diverse goods. The SBP’s
initiative aligns with global trends, where the consumer marketplace is increasingly shifting
to e-commerce.

Remittances

Around two-thirds of the remittances sent by workers to Pakistan come from the GCC
countries and Saudi Arabia. The Plan aims to broaden the range of export markets for
migrants by creating highly skilled and professional migrants for advanced market
economies.
In order to promote remittances through formal channels from the overseas Pakistanis, the
government has announced various measures like “Sohni Dharti”. Moreover, recently, the
Arab Monetary Fund (AMF) and State Bank of Pakistan has signed an MoU to establish
cooperation between Buna, a cross-border payment system owned by AMF and Raast,
Pakistan’s Instant Payment System.

Foreign Direct Investment Strategy

The Plan aims to increase net Foreign Direct Investment (FDI) in Pakistan through
comprehensive reforms to simplify regulations, improve transparency, and enhance federal
and provincial coordination. The “Economic Revival Plan” includes the establishment of the
Special Investment Facilitation Council (SIFC) to serve as a single window for investment
facilitation and policy development. Various government bodies, including the Board of
Investment and the Ministries of Industries, Production, and Commerce, will collaborate
with provincial governments to streamline industrial processes and boost exports. Pakistan
has implemented a stringent Anti-Money Laundering and Countering Financing of Terrorism
(AML/CFT) framework, recognized by the Financial Action Task Force (FATF), to foster green
investments and address trade invoicing issues. The “Pakistan Regulatory Modernization
Initiative (PRMI)” aims to reduce business compliance burdens through regulatory reforms
and the establishment of the online Pakistan Business Portal (PBP). This initiative is part of
the Digital Economy Enhancement Project (DEEP).
Special Economic Zones (SEZs) are being developed nationwide to attract industrialization
and investment, with 35 SEZs currently operational. Efforts are underway to create a “One
Stop Service” for SEZ investors to expedite approvals. The Framework Agreement on
Industrial Cooperation under the China-Pakistan Economic Corridor (CPEC) seeks to
strengthen Pakistan’s export-oriented industrial base with Chinese support. The Revenue
Mobilization Investment and Trade (ReMIT) initiative focuses on strategic reforms to
enhance economic development, trade, investment, and revenue mobilization, aiming to
improve Pakistan’s investment climate and business competitiveness. ReMIT also addresses
capability gaps in developing sustainable and effective trade policies.

Exchange Rate Regime

The appreciation of the Real Effective Exchange Rate (REER) affects competitiveness. The
State Bank of Pakistan (SBP) will develop monetary and exchange rate management policies
prioritizing external sector stability, the accumulation of foreign exchange reserves, and
maintaining export competitiveness by considering the REER. Thus, the exchange rate
regime will be aligned with macroeconomic fundamentals. Nevertheless, the necessary
measures to curb the speculative/illegal tendencies will be further strengthened.

Institutional Strengthening and Establishing Provincial Linkages

Ministry of Commerce will implement the policy interventions planned under STPF 2020-25
to further strengthen the work of the institutions in order to facilitate the trade and support
the export enhancement strategy.
In the wake of 18th Amendment, the STPF 2020-25 identified that the trade related multigovernance level structure requires continuous engagement with relevant Provincial
departments in order to facilitate the trading activities and formulation of provincial export
development plans in line with the STPF. Moreover, 5Es framework approved by National Economic Council in June 2023 also envisaged to align national and provincial policy interventions for synergizing efforts.

2.5: Proposed Implementation Matrix

For effective implementation of the plan, an action matrix has been developed where
responsibility of the respective government agencies has also been fixed along with
timelines.

1.3 Fiscal, Monetary, and Capital Market Developments

Historically, Pakistan’s tax-to-GDP has remained stagnated at a lower level due to existence
of large informal economy / untaxed sectors, tax evasions, exemptions/concessions,
underreporting of taxable incomes and issues in tax administration, etc. Thus, the fiscal
policy has been ineffective in raising the living standards and welfare of the masses. Like
other developing countries, monetary policy in Pakistan is subservient to the fiscal policy.
With the enforcement of the State Bank of Pakistan (SBP) Act, 1956 (amended upto January
2022), the primary objective of the monetary policy is to achieve and maintain domestic
price stability.
The 13th Five Year Plan intends to follow a robust recovery with an ambitious reform agenda
to be focused on fiscal consolidation, enhanced monetary policy effectiveness, deepening
of capital markets. The fiscal consolidations reforms would include broadening the tax base
through various tax reformsand anti-smuggling strategies. It would also entail measures in
reducing fiscal expenditures by rationalizing overall public spending. The Plan also envisages
reforms for making monetary policy more effective in achieving price stability in the
presence of evolving risks and challenges to the economy and financial stability, including
volatile global economic environment, rising risks associated with climate change, and rapid
digital innovations.

Review of Last Five Year (2019-23)

Fiscal Developments

During the last five years, Pakistan was unable to improve its tax-to-GDP ratio (9.6 percent
on average; one of the lowest in the world-peer country comparison) and observed
stagnation on expenditure side, as a result fiscal consolidation during the last five years could
not be achieved (as shown by average primary deficit of -2.0 percent).
During the last five-year efforts were made targeting the Sustainable Development Goals
(SDGs) and envisaged an inclusive and sustainable growth with adequate resources for
investment in physical and human capital. Further, improved functioning and effectiveness
of fiscal federalism was also envisioned in view of the provisions of Fiscal Responsibility and
Debt Limitation Act to put the country on a sustainable path of development by overcoming
the bottlenecks hindering economic activities. Fiscal policy remained focused at mobilizing
domestic resources through an efficient, progressive and easy approach to administer
taxation system for meeting public spending needs to cater for socio-economic objectives of
inclusive and sustainable growth, poverty alleviation and human development during the
review period. Accordingly, a process of reforms was initiated to bring fiscal consolidation
through the introduction of measures for revenue mobilization and expenditure
rationalization.
The fiscal consolidation efforts during the period under review remained under tremendous
pressure due to elevated level/high expenditures on the one hand and less than
targeted/estimated revenues to finance these expenditures on the other. In addition to
losses of SoEs, high interest payments, untargeted subsidies, energy subsidies and security
related expenditures consumed most fiscal resources. The additional expenditures related
to the procurement of vaccine during COVID-19 pandemic, IPPs Circular debt payment, and
social sector spending coupled with subsidies on petroleum products owing to higher international oil and commodity prices caused by Russia-Ukraine war worsened fiscal
consolidation besides devastating monsoon floods in 2022. It is also pertinent to mention
that the expansionary fiscal policy stance adopted in FY22 reversed the consolidation gains
achieved in the preceding two years. These developments put fiscal sustainability at risk in
terms of higher fiscal deficit. Consequently, the country was unable to direct sufficient
resources towards productive sectors. The unprecedented amount of expenditures
surpassed revenue and annual average fiscal deficit witnessed extraordinary rise which
remained substantially above the average annual budget target and benchmark level as well,
as a percent of GDP. As a result, Primary deficit as percentage of GDP initially jumped to 3.1
percent in FY19 although followed a downward trajectory in FY20 and FY21 which was
largely due to economic growth and again increased back to 3.1 percent in FY22. The average
annual primary deficit recorded at around 2.0 percent of GDP during the period under review
much higher than 1.0 percent average annual budget target of previous five years.

Pakistan’s tax-to-GDP ratio (9.3% in FY23) has remained one of the lowest among emerging
and developing economies. Average annual growth of FBR’s tax revenue remained 13.8
percent which was less than the growth in nominal GDP. Average annual growth of direct
taxes was 17.6 percent (mostly collected through withholding tax-70% of the total direct
taxes) as compared to 11.6 percent of indirect taxes. This improvement is attributed to the
introduction of differential taxation system for filers and non-filers of income tax returns,
improvement in tax compliance and enforcement, and capping certain tax concessions/exemptions. However, relative shares of direct and indirect taxes remained
unchanged at around 40:60. The overall tax collection remains pro-cyclical, thereby
increasing fiscal sector vulnerabilities, especially during downturns, as well as leading to low
fiscal buffers. Within indirect taxes, customs duties recorded average annual growth of 10.2
percent, sales tax (12.3 percent) and federal excise duty (12.5 percent). The annual average
tax-to-GDP ratio remained stagnant at about 9.6 percent as against average budget target
of 12.6 percent.

In the past, most of the fiscal sector reforms could not be implemented in earnest, due to
challenging political and economic environment. Fiscal space therefore remains constrained,
with a share of funds allocated to current expenditure instead of allocation towards
productivity enhancing investment and development spending. The comparison of fiscal
balance indicates that growth in Pakistan’s total fiscal expenditure increased at a higher pace
than growth in total revenue collection, resultantly, sustained fiscal deficit contributed
towards public debt burden relative to regional and peer countries (Table 2). On average,
fiscal dissaving has been persistent and large in Pakistan in comparison to regional peers and
EMDE, which is one of main reasons that fueled domestic demand and led to relatively
higher external current account deficit (which is a mirror image of saving-investment gap by
definition), compared to peers.

The failure to increase the tax-to-GDP ratio and delay in implementation of required reforms
has pushed the country to a debt-deficit spiral, as perennial implementation failures have
marred the debt repayment capacity of the economy on a sustained basis. Post-pandemic
policy normalization and adverse terms-of-trade shocks have resulted in increased funds
requirements to service domestic and external debt. The inherent fiscal sector
vulnerabilities in Pakistan have alarmingly increased; Table 3 reveals that Gross financing
need of Pakistan at 23.7% of GDP in 2023, is substantially higher than peer EMDEs. In
addition, external debt maturity has come down to the short tenor. IMF’s projection for
Pakistan’s fiscal deficit for the next 5 years (on average) is 6.2% of GDP (a high and
unsustainable level); this implies that unless concerted structural reforms are implemented;
fiscal space will remain under stress and resultantly spending on development projects,
education, health and raising productivity will be extremely limited.
The stock of public debt mounted to Rs. 62,880 billion on 30th June 2023 as against Rs. 24,953
billion recorded on 30th June 2018, with average annual growth of 20.6 percent whereas
average annual growth of total debt of the government remained 20.5 percent during the
said period. Public debt to GDP ratio increased from 63.7 percent to 74.8 percent during this
period and remained higher than the budget target of 69.1 percent for 2022-23.

Apart from fiscal deficit, unprecedented revaluation loss on account of currency
depreciation and build-up of liquidity buffer contributed significantly toward the increased
debt-to-GDP ratio during this period (Table-4). Consequently, a sharp rise in domestic and
external debt coupled with structural issues of the energy sector during the last few years
also exacerbated the debt situation.
The Medium-Term Debt Strategy (MTDS) is used for the review of debt in the previous plan
period, as the same is prepared keeping in view the requirements of medium-term budgetary framework and in consultation with relevant stakeholders, as outlined in the
Fiscal Responsibility & Debt Limitation Act (2005). Overall, the MTDS aims to ensure debt
sustainability, where borrowing is undertaken with an aim of ensuring low cost in the
medium term. This is achieved by setting indicative targets / ranges for key risk indicators
which the government aims over the medium term to manage its public debt portfolio
effectively. The key targets are based upon:
 Currency Risk: defined by the maximum benchmark of external debt in total public
debt.
 Refinancing Risk: by maintaining the Average Time to Maturity (ATM) over and above
a minimum benchmark for domestic and external debt respectively.
 Interest Rate Risk: defined by the percentage share of fixed rate debt in government
securities.
 Concentration Risk: diversifying the debt composition by increasing the share of
shariah-compliant government securities.
Based on the above, debt key risk indicators for the past five years 2019-23 are as under:

Loss-making SoEs remained continued to burden on the national exchequer as their
domestic debt increased from Rs.1,068.2 billion to Rs. 1687.2 billion with an average annual
increase of 31.3 percent whereas their external debt increased from Rs.324.6 billion to Rs.
2150.8 billion with an average annual growth of 48.0 percent.
In the past, most of the fiscal sector reforms could not be implemented in earnest, due to
challenging political and economic environment. Fiscal space therefore remains constrained,
with a share of funds allocated to current expenditure instead of allocation towards
productivity enhancing investment and development spending. Consequently, allocation for
vital long-term growth objectives through spending on education, technology, health and
social development has been remained less than adequate to bridge the existing service delivery gap and to improve aggregate productivity in the economy. Pakistan stands at a vital
juncture where fiscal reforms on both expenditure and revenue sides, are urgently required
to address long-standing issues to ensure a sustainable growth level, going forward.

Monetary Developments

The monetary policy during FY2019-23 was geared to achieve price stability as stipulated in
the amended SBP Act, 1956 and supporting the Government’s general economic policies
with a view to contributing to fostering the development and fuller utilization of Pakistan’s
productive resources. These objectives along with fundamental reforms for minimizing
government borrowing for budgetary support from the SBP and addressing the financial
losses of SoEs to ensure sufficient funds availability for expansion of private sector during
the last five years.

Global economic activity has faced a generalized slowdown during last five years with
inflation higher than that observed for several decades. Likewise in case of Pakistan, the
cost-of-living crisis, tighter financial conditions in various regions, COVID-19 pandemic, the
Russia-Ukraine war and super flood 2022 heavily impacted inflation rate. Average inflation
increased from 8.9% in 2021 to 29.2% in fiscal year 2023. After witnessing a peak of 38% in
May 2023, the inflation year on year basis, has started to ease and it was recorded at 26.8
percent in October 2023. The pressures on headline inflation during the period under
discussion can be ascribed to adjustment in prices of electricity and gas, a significant increase
in the perishable and non-perishable food prices, exchange rate depreciation along with
rapid increase in global fuel and commodity prices.

With growing imbalances in the economy along with challenging outlook, monetary
policy shifted gears. The SBP Monetary Policy Committee (MPC) implemented three
different monetary policy stances during the last 5 years (Figure 4). In July 2019, policy rate
was raised to 13.25%, which were subsequently brought down to 7% in June 2020 to prop
up the economic activities. The policy rate stayed at this level til September 2021 before the
normalization of policy rate gradually due to robust recovery in domestic demand, coupled
with higher international commodity prices, lead to a strong pick-up in imports and a rise in
the current account deficit. In response the policy rate was increased reaching a record high
of 22% in June, 2023. The policy rate was increased keeping in view the escalated aggregate demand, supply-side pressures and exchange rate depreciation.

With an improvement in law-and-order situation and energy supplies led to a healthy growth
of credit off-take by the private sector, which increased from Rs.6 trillion at end June 2018 to Rs. 9.2 trillion at end June 2023 with an average annual growth of 10.7 percent. The credit
disbursement to private sector was broad based catering to the needs of various sectors
including textile, sugar, energy, chemicals, agribusiness etc. The planned fiscal consolidation
and realization of expected external inflows will create space for credit to private sector and
also improve the NFA of the banking system.
Net Domestic Assets (NDA) of the banking system increased from Rs.16.2 trillion at end-June
2018 to Rs.34.2 trillion at end-June 2023, while Net Foreign Assets (NFA) declined from
Rs.(-)0.21 trillion to Rs.(-)2.7 trillion during the same period. Expansion in NDA emanated
from government budgetary borrowings as well as provision of credit to non-government
sector. On the other hand, decline in NFA was mainly due to developments in the external
sector like increase in current account deficit. As a result of changes in NDA and NFA, money
supply expanded from Rs.16 trillion at end June 2018 to Rs.31.5 trillion at end June 2023.
During this period, government budgetary borrowings from banking system increased from
Rs.9.4 trillion to Rs.22.3 trillion. Reserve money/monetary base also expanded from Rs.2.8
trillion to Rs.11.4 trillion, while an expansion was observed in currency in circulation from
Rs.4.4 trillion to Rs.9.1 trillion. 

Review of Capital Markets

During the last five years, primary focus was on developing a robust capital market;
enhancing its efficiency, transparency, integrity and reliability to boost investor confidence;
and providing necessary infrastructure to elevate market competitiveness in international
arena.
In view of the above, the Securities and Exchange Commission of Pakistan (SECP) has
implemented many structural and legislative reforms. These include; launch of the new
trading system at Pakistan Stock Exchange Limited (PSX) to upgrade its technological
functionalities for faster and efficient trading, introduction of regulatory framework for
‘Online-Only’ category of securities brokers embodying less stringent regulatory
requirements, issuance of list of approved auditors for statutory audit of SECP regulated
entities , simplification of Broker Ratings Regime, initiation of voting in separate categories
for election of female and Independent Directors on the board of a Listed Company,
revitalization of the Real Estate Investment Trust (REITS) sector to promote ease of doing
business, notification of the Asset Backed Securitization Regulations, 2022 to address
operational matters, amendment of the GEM regulatory framework to promote and attract
investors to trade on Growth Enterprise Market (GEM). Pursuant of operationalization of
Electronic Warehouse Receipt (EWR) after issuance of the first EWR of super basmati rice on
18th March 2021, a total of 2,006 EWRs of eligible commodities (rice, paddy and maize) have
been issued out of which 1,379 EWRs amounting to Rs. 2,463 million have been pledged till
June 30, 2023. Moreover, enabling framework for Special Purpose Acquisition Companies
(SPAC) has been instituted to promote acquisition and merger transactions in Pakistan.

During the last five years, primary focus was on developing a robust capital market;
enhancing its efficiency, transparency, integrity and reliability to boost investor confidence;
and providing necessary infrastructure to elevate market competitiveness in international
arena.
In view of the above, the Securities and Exchange Commission of Pakistan (SECP) has
implemented many structural and legislative reforms. These include; launch of the new
trading system at Pakistan Stock Exchange Limited (PSX) to upgrade its technological
functionalities for faster and efficient trading, introduction of regulatory framework for
‘Online-Only’ category of securities brokers embodying less stringent regulatory
requirements, issuance of list of approved auditors for statutory audit of SECP regulated
entities , simplification of Broker Ratings Regime, initiation of voting in separate categories
for election of female and Independent Directors on the board of a Listed Company,
revitalization of the Real Estate Investment Trust (REITS) sector to promote ease of doing
business, notification of the Asset Backed Securitization Regulations, 2022 to address
operational matters, amendment of the GEM regulatory framework to promote and attract
investors to trade on Growth Enterprise Market (GEM). Pursuant of operationalization of
Electronic Warehouse Receipt (EWR) after issuance of the first EWR of super basmati rice on
18th March 2021, a total of 2,006 EWRs of eligible commodities (rice, paddy and maize) have
been issued out of which 1,379 EWRs amounting to Rs. 2,463 million have been pledged till
June 30, 2023. Moreover, enabling framework for Special Purpose Acquisition Companies
(SPAC) has been instituted to promote acquisition and merger transactions in Pakistan.

The benchmark KSE-100 index decreased by 1.1 percent, from 41,911 points as on end June
2018 to 41,452 points as on end June 2023 with a maximum of 48,726 in June 2021 and a
lowest of 27,229 in March 2020. Market capitalization also declined by 27 percent (from Rs.
8,740 billion as on end June, 2018 to Rs. 6,365 billion as on end June, 2023), reaching the highest level of Rs.8,829 billion during July 2018 and a minimum of Rs.5,621 billion during
March 2020. It was 7.5 percent of GDP in June 2023, well below the average of developed
stock markets (50 percent) which indicates the potential scope for further improvement. 

13th Five Year Plan (2024-29)

Fiscal Policy Landscape

The plan will mainly focus on robust recovery from existing fiscal challenges with an
ambitious reform agenda in terms of strengthening fiscal consolidation and enhancing
competitiveness, which will be supported and carried forward by strong political ownership
and commitment. The reforms journey will include measures to increase revenues by
broadening the tax base, including from closing exemptions and tapping increased revenue
from agriculture, retail, and property to mobilize considerable revenue. On expenditure side,
it will also entail measures to rationalize fiscal expenditures, such as by reducing wasteful
and regressive subsidy spending, and to restore private sector confidence through business
regulatory reform by including reforms to SoEs beside addressing inefficiencies and high
costs in the energy sector.

Objectives

The main objectives of the Plan under the fiscal policy are to:
 Reduce reliance on borrowing by looking for ways to create budgetary space through
sustainable domestic resource mobilization
 Increase the tax-to-GDP ratio steadily and consistently in accordance with peer
countries by broadening the tax base through economic documentation beside
rationalizing exemptions and simplifying procedures.
 Create a broad-based taxation system with progressive and rationalized rate
structures to encourage investment and the implementation of multilateral trade
facilitation agreements.
 Reduce dependency on indirect taxes and increase the contribution of direct taxes in
total tax collection;
 Increase targeted development spending to meet the socioeconomic goals of
inclusive and sustainable growth, poverty alleviation, and human development.
 Enhance the efficiency and efficacy of fiscal federalism by rationalizing expenditures,
specifically, current expenditures including subsidies to the energy sector to increase
fiscal space in accordance with the provisions of the Fiscal Responsibility and Debt
Limitation Act (2005).
 Increase the provincial own revenue generating efforts especially in agriculture,
services and real estate sectors so as to decrease tax burden by the existing taxpayers
and vulnerable segments under the federal government’s tax net;
 Bring the retail trade into the tax net gradually
 Privatize Public Sector Enterprises to decrease burden on the national exchequer and
create fiscal space for the required development outlay
During the plan period, Tax-to-GDP ratio will be gradually increased to 15.5 percent in 2028-
29 from 9.3 percent recorded in 2022-23 whereas fiscal deficit is anticipated to decrease
from 7.8 percent of GDP in 2022-23 to 4.2 percent in the last year of the Plan. Besides, debt to GDP ratio would be gradually adjusted towards the sustainable levels as stipulated by the
Fiscal Responsibility and Debt Limitation Act, 2005.
For the debt; the MTDS is developed after consultation with relevant stakeholders and inline
with the macro-economic projections outlined in the Medium-term Budget Strategy Paper
(FY2023-24 to FY2025-26). The projected indicative ranges for key risk indicators are as
under: 

Strategies

The following strategies will be used to attain the objectives. The specific interventions for
broadening the tax base are as under:
 The FBR will gather transaction data by connecting enterprises and
commercial/financial entities to its completely automated system;
 To improve the provincial share of the tax-to-GDP ratio, the provincial tax collecting
departments / Revenue Authorities will be augmented with stringent enforcement
mechanisms and automation. Specifically, provincial governments will begin changes
to extend the tax nets of agriculture and services sectors, which are now undertaxed
and contribute significantly less to overall tax revenue than their share in GDP.
Similarly, Property tax regimes would be improved in terms of policy and
compliances;
 Exploiting the untapped economic potential of the real estate sector at the federal
and provincial levels. The primary measures in this regard will be the implementation
of valuation tables based on current market rates (to be updated after regular
periodic evaluations), the tightening of the withholding tax regime on the transfer of
immovable property, and strengthening of the capital gain tax regime. 

 Improving the tax system’s efficacy by separating tax policy and tax administration.
 Strengthening the FBR’s tax administration and the reach of Inland Revenue Offices
to all districts by establishing district tax offices, enhancing their logistics, and
supplying the necessary human resources;
 Rationalizing tax rates and exemptions/concessions given under various tax laws, as
well as pursuing efficient expenditure management by rationalizing untargeted
expenditures and subsidies;
 Documentation of informal economy and harmonization of tax regime are needed to
broaden the tax base. In this regard, the concerted efforts to the digitalization of all
aspects of economy including;
 Adopting a “Whole-of-Government Approach” in support of trade facilitation
commitments by developing a National Single Window and Authorized Economic
Operator Programme; developing and implementing a comprehensive National AntiSmuggling Strategy based on the “Depth-of-Border Approach” by i) establishing a
National Targeting Centre, ii) raising a dedicated and equipped Customs Border
Force, and iii) developing the necessary human resource;
 Improving fiscal federalism to provide provinces more incentives to rely on their own
revenue-raising activities rather than federal transfers. As a result, changes will be
made under the new NFC Award;
 Reduce dependence on indirect taxation. Strict regulation for those who
conceal/misreport facts. Effective crackdown on under/over invoicing. Incentives for
tax payers and formal sectors. Implement a robust monitoring and evaluation
framework to regularly assess the progress of strategy implementation and make
adjustments as needed. Develop mechanisms to hold responsible parties
accountable for the timely and effective implementation of strategies, ensuring
transparency and oversight;
 Tax enforcement also needs to be strengthened by tightening risk-based auditing and
strengthening data cross-checks through CNIC, third-party data and/or point of sales.
At the same time, concerted efforts are needed to facilitate businesses through
simplifying tax filing and accelerating the payment of refunds;
 One of the key irritants in improving the tax collection is lack of swift litigation
resolution of FBR’s tax claims on businesses and individuals tax payers. FBR with the
help of federal and provincial governments should develop a comprehensive plan to
handle the backlog of more than Rs2.7 trillion worth of tax cases pending in courts,
and expedite their resolution;

 Reviving the privatization initiative and addressing the SoEs structural flaws in order
to increase efficiency and reduce their losses to make them profitable entities;
 Making the PSDP more responsive to gaps in public infrastructure both in real and
soft sectors. While increasing the efficiency of the PSDP based interventions through
using RBM methods. PSPD portfolio cleaning and invoking upon innovative fundraising models for financing the PSDP would also be pursued. Focus PSDP on
facilitating Investment, exports, and productivity;
 Besides broadening of tax base, improving the Public Financial Management by
expediting reforms agreed with the multilateral institutions for increasing the
efficiency and transparency of fiscal spending. Moreover, the expediting
implementation of Treasury Single Account (TSA) to ensure efficiency of fiscal spending. Implementation of TSA-II and PFM reforms implementation based on the
PFM ACT 2019 would be the core policy drive for expenditure improvement;
 Rationalization of disbursements of subsidies by having targeted subsidies to the
poor and the needy. Besides subsidies also issue guidelines and improve
management for incurring liabilities on part of the government to reduce contingent
debt burden and circular debts;
 Budget-Making taking beyond a Number Balancing Exercise by creating Independent
Budget Unit in the Parliament.
 For the debt management, targets are planned to be met through pursing the
following major initiatives in the medium-term period:
o The domestic market will remain as a main source of funding to finance the
fiscal deficit and for refinancing of existing domestic debt;
o Government is planning to introduce multiple instruments for the domestic
markets in order to broaden the investor base and offer diversified
investment avenues to investors.
o Liquidity available with Islamic banks is planned to be tapped through
issuance of Shariah compliant instruments against assets which have become
available after maturity of earlier issued GoP Ijara Sukuks. Government will
also consider option of asset light structures based on Musharaka, Ijara,
Murabaha or any other Shariah compliant mode to raise funds;
o Government may also consider undertaking bond exchanges and buyback
operations to manage roll-over and refinancing risk by consolidating the large
number of outstanding securities into fewer and more liquid instruments;
o Government’s preference for external financing will be mainly from
multilateral and bilateral development partners and international capital
markets over the medium term keeping in view cost risk tradeoffs;
o Government intends to continue its partnership with international
development partners to take advantage of concessional / semi-concessional
funding. 

Monetary Policy and Inflation

The SBP will contribute to price stability, stability of the financial system and government’s
economic growth objectives.
Various reforms have been envisaged in the SBP’s Strategic Plan FY2024-28 for making
monetary policy more effective in achieving price stability in the presence of evolving risks
and challenges to the economy and financial stability, including volatile global economic
environment, rising risks associated with climate change and rapid digital innovations. First
and foremost is to revisit the medium-term inflation targeting range by Government in close
consultation of all relevant ministries of the government with the SBP. Other than these
reforms, other supplement reforms include fiscal reforms; encompassing reforms for
minimizing government borrowing for budgetary support from the banking system and
addressing the financial losses of SoEs will be initiated to ensure sufficient funds availability
for expansion of private sector.
The focus will be on financial sector development through efficient and effective banking
system. Moreover, National Financial Inclusion Strategy will also focus to enhance coverage
of the banking system.

Capital Market Development

Objectives

The main objectives of the Plan in capital markets are to:
 Encourage closer linkage & connectivity of the capital market with the real economy
and make practicable contributions towards the implementation of the future
initiatives of the government;
 Promote efficiency, transparency, integrity and a strong culture of compliance to
ensure enhanced investor protection;
 Provide diversified investment alternatives and facilitate long term savings and
investment by extending outreach of capital market;
 Encourage participation of the non-banking financial sector in the development of a
vibrant and active capital market including promotion of REITS in Pakistan;
 Strengthen and facilitate the Know Your Customer (KYC)/CDD framework for
integration of the Anti-Money Laundering and Combating the Financing of Terrorism
(AML/CFT) regime in overall capital market framework;
 Facilitate “Ease of Doing Business” through technology, digitization and process
reengineering and promote close collaboration among SBP, FBR and SECP, etc.;
 Promote financial deepening by discouraging investment in government securities
 Develop debt capital market with the aim to reduce cost of borrowing by government
for financing new infrastructure projects;
 Encourage corporations (both private & public) to go for funding retirement benefits.

Strategies and Way Forward

In Pakistan, capital market is dominated by stock market and financial intermediation is
largely bank-centric, which limits the capacity of financial sector in terms of investments.
During the Plan period, wide-ranging reforms will be initiated for diversification of the capital
market and expansion of the non-banking financial sector through multi-pronged reform
initiatives. With a view to ensuring meaningful contribution and improvement in the
financial market, regulations for market infrastructure institutions and monitoring,
compliance and enforcement shall continue to be reviewed and strengthened for better
consistency with legislative developments and various rules and regulations framed
thereunder.
In order to encourage closer linkage and connectivity of the capital market with the real
economy, following measures will be taken:
 Development of the primary market is planned through encouraging new equity
listings (IPOs) by approaching large cap well-governed companies and organizing
industry specific roundtables, conferences and summits etc
 Infrastructure project financing will be promoted through capital market.
 SME sector will be facilitated through focused efforts towards simplifying listing and
trading of SMEs on the Pakistan Stock Exchange.
 Government also plans to develop a regulatory framework for creating linkages
between warehousing, collateralization, issuance of Electronic Warehouse Receipt
(EWHR), EWHR financing and eventually trading of EWHR on the Pakistan Mercantile
Exchange (PMEX) platform. Moreover, listing of commodity market deliverable
futures will be promoted, leading to the launching of agricultural commodity futures
contracts on PMEX.
 Strategy for dealing with illegal forex houses/unlicensed futures trading platforms
will be developed through technology restriction and strict law enforcement for
promoting business in regulated commodity futures exchange.
 Initiatives to promote efficiency, transparency and integrity and a strong culture of
compliance for ensuring enhanced investor protection is also envisaged in the Plan.
Steps in this process include:
 Revised custody/clearing system will be explored and implemented to suit local
markets scenario which protect the retail investors’ custody of shares;
 Reforms are envisaged in Customer Protection Compensation Fund (previously called
the Investor Protection Fund), to provide effective asset protection in case of broker
fraud or bankruptcy;

 Enhancement of the size of Settlement Guarantee Fund through sustainable means
to ensure its adequacy keeping in view the risk and level of trading activity at PSX.
Initiatives to provide diversified investment alternatives and facilitate long term savings and
investment by extending outreach of the capital market, which include:
 In order to address hedging and investment needs, new products such as stock and
index options and Exchange Traded Funds and activation of cash-settled stock and
index futures contracts market are envisioned;
 New investment products required, including commodity instruments, REITs, hedge
funds, etc. Options, futures, and swaps must be introduced in the Pakistani stock
market;
 In order to tap a specific market segment, more Shariah-compliant products will be
offered, which include Shariah-compliant financing alternatives. Furthermore,
platforms to allow brokers to offer other asset classes including mutual fund to
investors will be provided. Ensuring proficiency requirements and continuing
professional development for anyone playing key role in brokerage firms, asset
management companies or entities providing investment advice;
 A major national education and awareness programme will be initiated in
coordination with all stakeholders. Besides, curriculum revisions at bachelors and
master’s level in disciplines of economics, business administration and commerce
will be encouraged through the Higher Education Commission.
 In order to reap benefits from opportunities prevalent in the region, collaboration
with regional markets is also envisaged.
Measures to encourage participation of the non-banking financial sector in the development
of a vibrant and active capital market including promotion of REITs in Pakistan include:
 Non-bank financial sector particularly mutual funds industry to be encouraged for
diversification of government securities towards retail investors;
 Housing focused REITs to be given incentives;
 Use of REITs model for development of public housing for transfer of government
land to REIT scheme on public private partnership basis;
 Credit risk mitigation/credit enhancement facilities for lending banking sector to
enable them to issue long-term bonds/securities instruments for onward lending to
agriculture, micro, small and medium enterprises.
Introduction of risk based supervisory regime, transition to risk-based approach by
intermediaries and streamlining the KYC process are envisaged in order to strengthen and
facilitate integration of the AML/CFT regime in overall capital market framework.
Multipronged strategy is envisaged with the aim of improving Ease of Doing Business in
Pakistan which includes simplifying procedures for opening of trading account, focus on
promoting technology and digitalization of processes wherein online filing of
returns/financial statements, reporting etc. will be ensured. Other strategies include fast
track implementation of all technology-based solutions, facilitation of approval processes
and providing guidance to the corporate sector for IPOs for facilitating Ease of Doing
Business.

Following are some perspective reforms to be initiated by the SECP during the 13th
Five Year Plan:
 Launch of Centralized Gateway Portal has taken place on September 21, 2023, which
provides a uniform digital onboarding process along with standardized one-time KYC
requirements across different asset classes regulated by SECP which includes
Securities Brokers, Future Brokers, Asset Management Companies, Insurance
Companies etc.
 Bring governance reforms in Capital Market Infrastructure Institutions in terms of
executive compensation, succession planning, roles and responsibilities of CEO etc.
 Introduction of Capital Market Development Fund in line with international best
practices.
 Facilitate operationalization of Online Only Brokers.
 Issuance of ESG Guidelines for Listed Companies.
 Explore modalities and conduct ground work to design launch of Environmental,
Social and Governance (ESG) Index at PSX.
 Conduct international research for developing a green taxonomy for capital markets
that aligns with climate priorities.
 Facilitate launch of Derivative Products i.e. Case Settled Futures and Single Stock
Options at PSX in terms of necessary regulatory framework and related
specifications.
 Further enhancement of circuit breakers and introduction of two-tier market halts.
 Bring further reforms in Code of Corporate Governance Regulations in light of
international best practices.
 Facilitate shariah compliant market at PSX through introduction of Islamic products.
 Strengthen Cybersecurity Measures at Capital Markel Infrastructure Institutions.
 Introduction of reforms in various SECP regulations to facilitate market development,
provide ease of doing business and protection of investors.
 New category of futures brokers i.e. ‘Agri-only’ brokers with lower entry barriers and
compliance requirements shall be introduced by PMEX to encourage new
participants in the commodities futures market.
 Link futures trading at PMEX with the domestic agricultural commodities market by
enabling regular trading of Electronic Warehouse Receipt based futures contracts at
its platform.
 Amendments in REIT Regulations, 2022 to enhance the activity in REIT sector which
can help drive growth in the broader real estate market.
 SECP is exploring the possibility of introducing framework for regulating asset
fractionalization including appropriate primary legislation under which the
framework can be developed.
 Public offering regime is under review in line with global best practices including new
concepts related to adoption of disclosure-based prospectus regime, issuance of
warrant(s), technology and other areas etc.

 Introduction of new board for public unlisted companies namely “Registration and
Trading Market”: SECP is reviewing international practices to introduce the concept
of registration of public unlisted companies on the separate board of Securities
Exchange.
 SECP is coordinating with SBP and Debt Office (Ministry of Finance) for providing
enabling environment for issuance and trading of Government Debt Securities
through Securities Exchange. 

1.4 Public Sector Investment

Introduction

Public Sector Development Programme (PSDP) is an important policy instrument to pursue
socio economic targets and goals set by the Government. Scarce public resources are
channelized through projects having complementary and crowding in impact on socio
economic activities. Ultimate goal of development expenditure under PSDP is to improve
the human development indicators on sustainable basis. PSDP is also critical policy
instrument attempt to achieve balanced regional development to promote harmony and
national integration among deprived segments of the society. PSDP thus require alignment
with 5 years plan objectives by adopting inclusive, consultative and participatory approach
with regular interaction of stakeholders. PSDP has forward & backward industrial linkages
to boost the economic activities and supplement the growth trajectory.

Objectives

The fundamental objective of a development plan is to evolve around consistent
development policies and sustainable economic agenda which the country may pursue.
Scare public resources need to be put together in achieving development objectives as
emanating from Five-Year Plan for ensuring Sustainable Development Goals by 2030.
Broader objectives of PSDP under 13th Five Years Plan have been set to ensure water, energy
and food security, private sector led growth, developing competitive knowledge economy
and modernization of physical infrastructure and greater regional connectivity. Efforts would
be made to promote innovative mode of financings of development projects such as public
private partnership to make development process more inclusive and effective in wake of
limited public fiscal space.

Strategy

Needless to emphasize that well planned strategies are required to sustain and support the
economy to grow and achieve Plan objectives. An alternative approach such as shift towards
devolution of authority and responsibility, greater community participation, privatization,
decontrol, deregulation and liberalization may be adopted instead of conventional approach
i.e. largely depend on public sector investment.
Keeping in view the resource constraints and importance of the private sector as an engine
of economic growth, the government through public sector investment will provide an
enabling environment to crowding in the private sector and fostering public-private
partnerships and joint ventures to reduce burden on the PSDP. Such partnership or
cooperation requires strengthening of institutions within or outside the government. It also
requires greater attention to the nature of incentives, monitoring, and technical and physical
infrastructure in the public sector.

5Es Development Framework

Pakistan currently faces several socioeconomic challenges that require holistic and
coordinated efforts for effective resolution. After extensive consultation with public and
private stakeholders during the Turnaround Conference 2022 to turn Pakistan’s future
towards prosperity and sustainable development, the Ministry of Planning, Development &
Special Initiatives (PD&SI) came up with 5E’s framework to combat Pakistan’s short- and
medium-term socioeconomic issues. Under this framework, key initiatives will be along the
lines of 5Es of development: Exports, Equity, Empowerment, Environment & Energy. The 5Es
framework will (a) address issue of exports promotion with different initiatives in various
sectors like; Manufacturing, Mineral, Investment, Commerce & SMEs, (b) Special emphasis
on providing equitable access to marginalized groups via affirmative action as and where
necessary (c) Inclusive development empowering our populations’ high potential yet
marginalized groups such as women and youth (d) focuses on providing institutional, legal &
policy objectives for minimizing the impacts of climate change on lives and livelihoods and
(e) availability of efficient energy and supporting infrastructure.

4RF Development Framework

Pakistan is ranked among the top 10 most affected countries due to climate change despite
being a very small contributor to its degradation (with under 1 % of global greenhouse gas
emissions in 2018). The country has observed changing weather patterns, including
variations in precipitation and temperatures, increased frequency and severity of tropical
storms and coastal rains, glacial melt, glacial lake outburst, flooding, sea level rise, loss of
biodiversity and droughts. While the underlying drivers of the disaster impacts are not
limited to climate change, the scale of flooding in Pakistan remained unprecedented in last
few years. Thus, the rural poor are the most vulnerable because of their reliance on
agriculture, livestock, fisheries, forests, and groundwater. The aforementioned events have
severely impacted the overall economy, especially the industrial and agricultural base of the
country.
MoPDSI in collaboration with the development partners and consultation with relevant
stakeholders prepared Resilient Recovery, Rehabilitation and Reconstruction Framework
(4RF). The 4RF is the Government of Pakistan’s strategic policy and prioritization document
which will guide the recovery, rehabilitation and reconstruction of the country. The 4RF
follows a globally recognized approach and methodology for recovery strategy
development. These 5Es and 4RFs framework of development shall be assigned priority
while allocating resources under the PSDP.

National Development Programme

The Plan envisages an investment of Rs 16,388 billion with an average annual growth of
about 8 %. The estimate annual phasing is given in table-1.

The enhanced-level of the public sector investment will provide required resources to
development programmes / projects and new initiatives for achieving objectives of the 13th
Five Year Plan, which provides country’s long-term development agenda to make Pakistan a
globally competitive and prosperous country by achieving the status of upper middle-income
country. The first priority is to provide every citizen an ability to improve his/her choices and
quality of life. This requires capitalizing upon and strengthening existing social capital,
improving the human skill base of the population and providing access to opportunities. It
involves a rapid scaling-up of investments in education, health and social development,
generating jobs and opportunities for the youth bulge, harnessing the rising power of a
socially aware population, gender equality, inclusion of vulnerable segments, interfaith
harmony and religious diversity, promotion of art, culture and heritage, raising sporting
standards, and moving towards a knowledge-based, ethical and values driven society.
The agency-wise estimated allocation of the National Outlay (2024-29) is given in table-2
below, and its detailed sectoral breakup is at Annex-I.

As a result of the enhanced-level of resources made available to the provinces under the 7th
NFC Award and responsibilities under 18th Constitutional amendment, the size of provincial
ADPs has consistently increased over the past few years. The ratio between the federal PSDP
and provincial ADPs has changed correspondingly. The projected federal and provincial share in overall development programme during the Plan period is in the ratio of 39:61
respectively.
Physical infrastructure has been accorded highest priority with planned investment of
Rs 7,761 billion claiming a share of 47% in the planned outlay over next five years period.
Within the infrastructure sectors, top priority has been assigned to the Transport and
Communication Sector with 26% share followed by Water, Physical Planning and Housing
and Power Sectors with 9%, 7% and 5% shares, respectively.
The Federal Government in consultation with all stakeholders announced National Water
Policy 2018 which has taken cognizance of the emerging water crisis and to provide an
overall policy framework and guidelines for a comprehensive plan of action. In the 13th Five
Year Plan, adequate allocations in the public sector development program will be ensured
for the water sector. In line with investment requirements identified in the National Water
Policy 2018, an allocation of Rs. 1,502 billion has been proposed over the next five years for
water sector i.e. an average annual water sector investment at Rs. 300 billion.
As a policy, government is encouraging private sector to invest in Power sector.
Moreover, Rs 855 billion will be spent on energy generation and distribution in the public
sector during the plan period. WAPDA, PEPCO and NTDC will also invest self-generated
resources in the power sector. The main focus will be given to the completion of ongoing
mega projects. However, new schemes will also be initiated through public and private
investment especially in such a way that these schemes will become operational during the
Plan period.
In Social Sector, Health has been assigned highest priority with an investment of
Rs 1,367 billion which is 8% of total planned outlay. Education including higher education
welfare receive next priority with an allocation of Rs. 1,362 billion which is 8% of total
planned expenditure over next five years. 

Federal Program

An outlay of Rs 6,325 billion has been projected for the federal programme for the Plan
including 20–25% expected foreign project assistance by the development partners. While
making projections for the Plan, the federal investment has been set keeping in view the
increasing trend and meeting the growth target of the country and to meet the requirements
of ongoing projects for an timely completion, particularly mega projects of energy, water
resources, transport and communication and other important social and governance sector
projects. Sector-wise details are placed at Annex-II.
The federal development programme would be devised keeping in view the parameters of
the national development agenda, depicted in the 5Es and 4RF Development Frameworks.
The main thrust of the programme is on completion of ongoing projects and initiation of
mega projects in the infrastructure sector with proposed share of 64% of the programme,
being the primary responsibility of the federal government. Within the infrastructure sector,
about 34% will be invested in the transport and communications sector followed by 14% for
augmentation of water resources, 11% for power sector which is expected to rise as major
investment in power sector would come from private sector and 5% for the physical planning
& housing sector. Transport and Communication sector would get higher share in terms of resources during plan period mainly to ensure better connectivity and economic integration
on modern lines.
During the 13th Five Year Plan, the policy to modernize railway infrastructure would continue
to reduce the transportation cost and to reduce congestion on the highways that ultimately
reduce the maintenance cost of highways. During the plan period, under CPEC, ML-I mainline
(Phase-I) would be upgraded. Other projects would be upgradation / modernization of
railways track and related infrastructure, procurement of new diesel engines, procurements
/ manufacture of high-capacity bogies freight wagons and passenger coaches, rehabilitation
of rolling stock, up-gradation / renovation of railway stations and terminal facilities at dry
port.
A substantial increase of investment in the energy sector, both through budget and selffinanced, will cater to the financial requirements of the strategic projects of the WAPDA,
PEPCO and other energy projects that are being executed by the Pakistan Atomic Energy
Commission. To supplement efforts of the government, investment by the private sector
in the energy projects will be encouraged by strengthening the existing legal, financial
and regulatory framework. Furthermore, assistance will be provided to the WAPDA and
PEPCO through PSDP budget. Moreover, these organizations will invest in the energy sector
from their own generated resources.
In the water sector, priority will be given to the ongoing projects for an early completion.
Water sector investment under federal PSDP shall be as per National Water Policy. The
provincial governments will assume the responsibility to undertake small and medium dams,
lining of irrigation and improving distributary channels for economical use of water.
However, the federal government will continue to finance large multi-purpose dams and
ongoing mega projects.
The social sector will receive 14% of the federal programme. Within the social sector,
education including higher education and skill development has been given the highest
priority with 8% of the total federal PSDP, followed by health and Climate Change with 2%
each. For promoting higher education, the federal government will continue its funding for
strengthening of already established university campuses to make them a center of
excellence during the plan period. 

Though the agriculture sector has been devolved to the provinces, yet it needs federal
attention for innovation and research to ensure food security in the country. To promote
agriculture, industry & commerce and minerals on modern lines and to attract private
investment, an amount of Rs 333 billion has been proposed during the Plan period. This
amount will mainly be spent on research and development to boost productivity and
promote value-addition in the domestically produced products so that these become
competitive, and earn more foreign exchange through export of agro-based industrial
products.
To bring Merged Districts of Khyber Pakhtunkhwa at par with other developed areas an
outlay of Rs. 1000 billion was approved by the federal government under 10 years
development plan. During the plan period merged districts will receive a funding of
Rs. 391 billion under 10 years development plan in addition to already provided funds to
the tune of Rs 143 billion.
For research and development in the field of science and information technology,
Rs 235 billion have been proposed during the Plan period. Major investment in IT sector
would come from private sector. The federal government will continue to invest in
research, development and in those areas where the private sector is reluctant to invest.

Provincial Projects in federal PSDP

Under the 18th Amendment to the Constitution of Pakistan, passed in 2010, certain subjects,
such as education, health, and social welfare etc. were transferred to the provinces, making
them responsible for the planning and execution of policies and projects related to these
subjects. However, the Federal Government has been financing projects of provincial
nature which otherwise was the responsibility of provincial governments especially after
18th amendment to supplement provincial resources. Due to financial constraints, the
financing of mega projects of national importance by the federal government is being
adversely affected. Thus, it was decided that the provincial projects would be financed
through cost sharing by the provincial governments.
However, the shrinking size of PSDP amid growing share of provincial nature projects has
seriously undermined national infrastructure projects. Therefore, it was realized that share
of provincial nature projects should be contained to minimum level so that adequate
funding for timely completion of vital mega national projects can be ensured and cost
overrun be avoided. Thus, NEC in its meeting held on 29th January, 2024 approved
modalities for closure/ transfer of provincial nature projects in federal PSDP 2023-24 and
barring inclusion of provincial development projects in Federal PSDP:
“No provincial nature projects or programs be included in PSDP except those to be
implemented in least developed districts, /regions as determined by Planning
Commission”.

NEC guidelines for PSDP

For the las few years Pakistan’s economy has been facing multiple challenges including fiscal
and current deficit. Due to fiscal constraints, size of PSDP in real terms is decreasing while
due to price escalation and devaluation of Pak currency against international currency the
PSDP formulation demanding extra ordinary initiatives to continue and complete national
significant projects. The NEC was requested for certain guidelines and to prioritize
requirements for effective allocation of available development funds. Thus, NEC on 29th
January, 2024 approved following guidelines/ criteria for PSDP formulation:
i. Priority should be accorded to allocation of development funds to strategic and core
on-going projects, with particular focus on water resources, transport, railways,
communications, and energy sectors.
ii. Priority should be accorded to projects with 80% plus expenditure in all sectors with
the aim of completing them during FY2024-25.
iii. Ministries / Divisions may ensure allocation according to annual phasing of on-going
projects while remaining within the Indicative Budget Ceiling (IBC) as per PFM Act
2019.
iv. Due to fiscal constraints and huge throw forward, inclusion of new projects in
infrastructure sector should be exceptional.
v. Only 10% of development budget FY2024-25 should be considered for allocation to
new projects, with particular focus on supporting exports, enhancing productivity,
fostering competitiveness, deepening and spreading digital infrastructure,
innovation driven enterprises, industrial development, agroindustry and seed
development, blue economy, science & technology, R&D and innovation reforms.
vi. While making allocations for PSDP projects, DDWP approved projects will only be
allocated resources after full needed allocations have been made as per serial no (iii)
above.

vii. There will be a moratorium on approval / budgeting of projects involving O&M and
recurring nature expenditures.
viii. Economic Affairs Division (EAD) will provide firmed up foreign aid estimates to be
disbursed during FY2024-25, with further two years’ projection in consultation with
all stakeholders.
ix. Ministries / Divisions should prioritize and allocate adequate rupee cover to the
foreign funded projects within the IBC for smooth execution of foreign funded
projects and uninterrupted inflow of foreign exchange and to honor international
obligations.
x. Provincial nature projects shall not be considered for approval / financing except
those in 20 least developed districts, as determined by Planning Commission, and the
Newly Merged Districts (NMDs).
xi. Principal Accounting Officers should ensure placement of full-time Project Directors
as per applicable guidelines and put in place qualitative / quantitative monitoring
indicators to avoid time and cost overruns.
xii. Priority will be given to PPP projects, where PSDP funding is either used as equity or
as viability gap.

IMF- PIMA & C-PIMA Recommendations

Funding allocated to ongoing projects in the PSDP is insufficient to meet project
implementation plans and lead to slowing down the delivery of the projects. This creates
inefficiencies in project delivery and may lead to governance challenges. It can also mask
other sources of delays and difficulties in project implementation. Recently, Public
Investment Management Assessment (PIMA) and Climate Change (C-PIMA) reports by
International Monetary Fund (IMF) has been adopted by the Government. Following are
among the recommendations of these reports pertaining to PSDP which will be followed
accordingly:
(a) Set multi-year indicative budget ceiling by Ministries/Divisions.
(b) Examine the scope to reduce the within year adjustment of capital expenditure
(including restricting the ability to add new projects through supplementary grants
(c) Develop & publish criteria for selecting projects to receive the funding in PSDP
(d) Improving transparency by presenting documentation on key aspects of the PSDP.

Provincial programme

The Provincial A n n u a l Development Programmes (ADPs) are envisaged at
Rs 10,063 billion with an average annual growth of 7%. The planned investment of provinces
is about 61% in the overall National Development Programme. The resources for Provincial
program will be allocated by the provinces through their ADP as per their sectoral and
regional priorities. The provinces will have to play an important role for achieving the
national objectives of health, population welfare, basic education, and other amenities
provided by the local governments, particularly in the post-18th Constitutional amendment
scenario. The sectoral details are placed at Annex-III.
The infrastructure sector accounts for 37% of the provincial programme. Within
infrastructure, roads network will receive 21% of the programme followed by physical
planning & housing 8%, water 6%, and energy 2% of the total provincial program. For
promotion of agriculture, industry and minerals, an amount of Rs 650 billion has been
proposed for the plan period. For ensuring good governance, institutional reforms and law
& order 5% of the total planned outlay has been proposed. For science and information
technology sector, Rs. 55 billion have been kept for the plan period.
The provincial governments will invest 26% of their allocations in the social sector projects,
which include education, health, population welfare, rural development, culture, sports,
tourism, youth, clean drinking water, drainage and farm to market roads etc. Within the
social sector, health sector will receive 12% share followed by education including higher
education 9%. Local and district governments with receive 11% of the total resources.

Special Areas program

Special Areas including Azad Jammu & Kashmir, Gilgit-Baltistan and Merged Districts are
very important and an amount of Rs 737 billion has been allocated for these areas under
Plan period. Resources will be provided to these areas through the federal programme
according to the financial arrangements made from time-to-time. In turn, the Area
Governments will formulate their annual development programmes by incorporating
regional priorities. The break-up is indicated in table-3 below:

In addition to the above, some important projects of these areas will be financed and
implemented by the federal Ministries and Divisions.

Public Private Partnership Authority

Public Private Partnership Authority (the, “P3A”) was established on 8th June 2018 in
accordance with the provisions of Public Private Partnership Authority Act, 2017 (as
amended) (the, “P3A Act”). P3A is a focal entity at Federal Level to approve all qualified
projects through Public Private Partnership Working Party and its Board. In contrast to
qualified projects, which require approval of P3A Board, P3A is also mandated under the P3A
Act, including enabling regulations made thereunder, to advise, facilitate, and help the
Federal Implementing Agencies, including Provincial Governments, to develop and structure
non-qualified Public Private Partnership projects through its advisory mandate. The mandate
is extended to provide advisory services for Unsolicited Project Proposals (the, “USP”)
whether qualified or non-qualified. Except in case of non-qualified USP’s, such USP’s shall
undergo the approval process as has been defined in the P3A Act and the regulations made
thereunder.
Public Private Partnerships regime is relatively new paradigm within the Federal
Government thus, requiring robust, conducive, and dynamic regulatory framework enabling
the private sector to invest in the infrastructure projects. The regulatory framework devised
by P3A provides effective, timely and transparent project approval processes to boost the
private investors’ confidence in taking informed investment decisions for infrastructure
development.

13th Five Year Plan (2024-29)

PPP procurement is a deviation to the traditional procurement method, Public Private
Partnership projects are structured through private investors equity and commercial debt
for implementation while taking into account the value for money, return to the private
sector on its investment, cost to benefit analysis, socio-economic analysis, and other factors
such as risk allocations to the appropriate private sector or public sector entities.
Public Private Partnerships require continuous approach from Public Private Partnership
Authority (the, “P3A”) with respect to sectoral issues, realignment of objectives, policy level
interventions, programmes and target achievements. P3A foresees that the present fiveyear plan-2024-29 is an on-going activity for P3A. This also requires an active participation
from all Federal Implementing Agencies to P3A initiatives enabling the present five-year plan
to yield the required outcomes.

Sectoral Issues

Lately, Public Private Partnership initiative has been linked to the development of road
infrastructure only, which is not only misconceived but erroneous as well. The Public Private
Partnerships extends to all development projects, including provision of infrastructure and
services or both in diverse fields. In order to cope with this misconception, P3A shall take
necessary steps at policy level to eliminate this misconception by holding seminars, trainings
and consultative workshops. P3A is proposing policy level interventions as under:

P3A proposes to conduct the interactive sessions, seminars and workshops to provide to the
IA’s, actively pursuing in the developmental projects about the diverse nature of PPPs and
their applicability involving all sectors and possibility of undertaking diverse projects under
Public Private Partnerships provided such projects are economically and financially feasible
and provide value for money to the Government and end users within the ambit of P3A Act
and regulations made thereunder.

Policy Interventions/Programmes and Initiatives

P3A has developed a complete set of programmes and initiatives to be undertaken by it
during 2024-29 the said initiatives have been approved by the P3A Board. The said initiatives
are as under:

Targets

 P3A has set its target to achieve its initiatives within five years on an on-going basis
as shown in above table.
 Achieving the above policy level targets are highly dependent upon the
Implementing Agencies seriousness on the PPP regime. P3A during the
implementation framework shall sensitize the implementing agencies to explore PPP
options first and if it is concluded that a given project is not a viable option for PPP
only than government funding options should be explored as an alternate option for
implementation of a given development project.
 The critical aspect is the development of PPP project pipeline. P3A shall regularly
coordinate and collaborate with the different implementing agencies to identify,
conceptualize and screen the viable PPP projects through its advisory mandate and
otherwise on the request of an implementing agency on case-to-case basis.
 The identified projects shall further undergo detailed feasibility studies for which P3A
may provide Project Development Facility to an implementing agency subject to the
approval of its Board. Once operationalized and capitalized, P3A shall also provide
viability gap funding to appropriate PPP projects in accordance with its applicable
regulations. Depending upon the size of viability gap fund, P3A foresees to provide
VGF to at least two projects in a given financial year to make such projects bankable
and financially feasible.
 On the request of an implementing agency, and in accordance with the mandate
given to P3A under P3A Act, P3A shall also provide advisory services to implementing
agencies for their non-qualified projects. Such non-qualified projects shall be
approved by an Implementing Agencies competent authorities without undergoing
P3A approval processes.

P3A shall biannually prepare a report of its activities and initiatives for reporting to the
Ministry of Planning, Development and Special Initiatives and P3A Board for perusal and
feedback.

1.5 Private Sector Development and Competitiveness

Industry, Investment and Competitiveness

Rapid, broad-based and diversified industrial growth is central to the 13th Five Year Plan
objectives for improvement in the trade balance through productivity & competitiveness
enhancement, product development, export preparedness and generating productive jobs
leading towards the socio-economic development of the country. The Plan will take a policy
and reform centric approach to address key structural weaknesses that have resulted in a
stagnant share of industry in the economy and of manufactured goods in the overall exports.
Focus of the Plan will be on strengthening policy framework to improve the incentive regime
for industry, augmenting firm level productivity, standardization, adaptation of new
technology and competitiveness to attract higher private investment.
Manufacturing constituted 11.88 percent of the country’s GDP in FY 2022-237
. Exports are
stagnated and stuck in a low-value commodity trap, resulting in the widening of the current
account deficit.

Review of 12th Five Year Plan (2018-23)

Manufacturing sector’s contribution towards GDP was 12.33 percent in 2018 and did not
improve but slightly declined during the last five years i.e. 11.88 percent. The Plan under
review stressed formulating a National Industrial Policy, but it did not materialize. Similarly,
the total factor productivity growth, which is a key determinant of long-run output,
remained negative. Economy-wide TFP growth, according to different estimates, has
hovered around 2 percent over the last few decades.
Pakistan ranked at 107 out of 140 countries as per World Economic Forum’s Global
Competitiveness Index 4.0 2018 edition. However, due to low scoring in indicators such as
Infrastructure, Macroeconomic Stability, Health and Product Market, Pakistan slipped
further three ranks in 2019, from 107 to 110 out of 141 countries. Conversely, Pakistan’s
ranking in World Bank’s Doing Business report 2020 was 108 out of 190 countries, which
improved 28 ranks from 136 in 2019. This improvement of 28 points was historic in the
context of Pakistan since start of Doing Business rankings in 2002. Pakistan improved its
ranking from 147 (2018) to 108 (2020).

Situation Analysis

Pakistan’s weak regulatory regime, inconsistent policies, inadequate infrastructure,
cumbersome judicial process, rigid labour laws, complex taxation system, poorly designed
tariff policy, non-existent modern skills, weak contract enforcement, below par
technologically based SMEs & microenterprise sector, weak industry-academia linkages, low
competitiveness and organized system of patronage for uncompetitive industries are some
of the factors which hampered industrial development and ultimately triggeredindustrialization. According to the latest Business Confidence Index Survey (BCI) – Wave 248
,
conducted from Oct-Nov 2023 by Overseas Investors Chamber of Commerce and Industry
(OICCI), albeit some improvements, overall Business Confidence in Pakistan is still negative.
The survey has also highlighted key threats hindering the business growth including rising inflation, high taxation, Pak Rupee devaluation, inconsistent government policies, load
shedding and corruption/bribery etc.
Total Factor Productivity (TFP) growth and GDP growth have also been erratic in Pakistan
since early 1970s. As indicated in the Fig 1, the economy-wide TFP growth has remained
around 2 percent over the last few decades with intermittent negative growth. Lower
productivity implies that the economy is not competitive as compared to the economies that
have higher TFP growth, which could have consequences for Pakistan’s push for a larger
share in global exports.

Manufacturing is considered as a major sector for its contribution to the country’s GDP,
which is around 12% in FY 2022-23. Textiles and Apparel industries have the most weight in
the Quantum Index of Manufacturing 2022-23 i.e. 24.7%. It is also a leading sector in exports
with share of around 60%9
. However, its value of exports needs to be transformed from lowvalue to high-value products. Food & Beverages, Pharmaceuticals, Fertilizers and Chemicals
are also prominent manufacturing sectors in Pakistan. Although there was a slight growth in
Pakistan’s exports in the year 2022, but it remained stagnant in the last decade due to low
value, low tech and traditional commodities. Moreover, light engineering, fruit processing
and fisheries require substantial value addition to increase its contribution to the GDP. As
the country’s GDP growth is import-based, the predicament has led to persistent widening
of the current account deficit.

As per the SME policy 2021, there are 5.2 million SMEs in the country, and large number
amongst them are undocumented and remained as informal sector. Over 90%10 of
businesses fall under the definition of Small and Medium Enterprises. The growth of SMEs
always supports the economy. Some of the core and cross-cutting issues faced by this sector
are unconducive business environment, unskilled & semi-skilled human resource, limited
access to credit, low level of technology, lack of support for entrepreneurship development,
inefficient management, lack of automation system, market constraints, and so on.
Moreover, SMEs are facing capacity issues, lean manufacturing, access to finance, product
development, standardization & certification, adopting new technologies and improvement
in inventory management processes.

Competitiveness

World Economic Forum’s last Global Competitiveness Index report was published in 2019 in
which Pakistan’s ranking was 110 out of 141 countries as given in Fig 3 below:

Business Ready (B-Ready)

The World Bank Group has begun work to assess the business and investment climate in up
to 180 economies under its flagship Business Ready project—a key instrument of its new
strategy to facilitate private investment, generate employment, and improve productivity to
help countries accelerate development in inclusive and sustainable ways.
Business Ready improves upon and replaces the World Bank Group’s earlier Doing Business
project. It reflects a more balanced and transparent approach toward evaluating a country’s
business and investment climate—one that has been shaped by recommendations from
experts from within and outside the World Bank Group, including governments, the private
sector, and civil society organizations. The first annual Business Ready report, covering 54
economies, will be published in the Spring of 2024.. B-Ready focuses on ten topics which are
as follows:

Similar to B-Ready and competitiveness index, GoP is also focusing on improving the
industrial and business competitiveness of Pakistan. In this context, a dialogue is initiated
with international development agencies, domestic sectoral representatives, researchers
and monitoring & evaluation experts, for the development of Pakistan’s Competitiveness
and Productivity Index. This will support the country in sectoral assessment, cluster
mapping, business and investment climate index, export readiness index, etc.

Commerce

Exports are victim of protectionist tendencies, which incentivize production for the domestic
market rather than global markets. A paradigm shifts to provide incentives to industries to
move their production from low value to high value products is direly needed. Moreover,
another key measure to make exports competitive is to ease import restrictions. Tariffs and
other taxes on imports are much higher than other competing developing countries.
Pakistan Custom Tariff is also highly complex and has anti-export bias. Absolute exports
trend has been erratic and largely range bound in the last 10 years as evidenced from Fig 4
below:

Sectoral Issues

 Low FDI and flight of existing investment due to unconducive business and
investment environment.
 Weak regulatory regime/cumbersome judicial process/weak contract
enforcement/rigid labour laws/lesser complaint of firms regarding Environmental,
Social and Governance (ESG) mechanism.
 Lack of complete business solutions/one window operations/lesser coordination
among public & private stakeholders.
 Low-value added and uncompetitive products resulting in lesser exports as well as
low exports value / less emphasis on high technology exports.
 Low productivity of firms/capacity issues/inefficient management/lack of
automation system/inventory management processes.
 Lack of robust international value-chains / JVs.
 Inconsistent and ad hoc policy measures.
 Unavailability of raw material and other necessary ingredients/inputs at time,
rendering firms unable to meet export targets.
 Inadequate infrastructure.
 Complex taxation system and poorly designed energy/tariff policies.
 Market/product development & diversification constraints/ ineffective trade
facilitation measures/ lack of timely information & data/ hurdles while participating
in international exhibitions/ branding issues.
 Unskilled & semi-skilled human resource/non-existent modern skilled
manpower/less participation of women in workforce/
 Low exposure towards adopting new technologies/ lower technologically based
SMEs & microenterprise sector.
 Standardization & certification issues of firms especially SMEs and export-oriented
sectors.
 Weak industry-academia linkages/lack of innovation and R&D.
 Limited access to credit/finance.
 Lack of support for entrepreneurship development.

Objectives

During the Plan period, focus will remain on ICT and technology adoption, vocational training
and skill development, streamlining processes leading to efficiency and creating conducive
business/investment environment,improved product markets by the introduction of new
industrial policy to provide level playing field, encouraging competitiveness and developing
world class infrastructure to improve Pakistan’s global economic standing by 2029.
Key objectives for improving productivity and increasing investment in industry are as
follows:
 Augmenting productivity, boosting up pace of industrialization, and job creation
through technology relocation along with expertise transfer to locals.
 Enabling conducive investment & business environment, global competitiveness.
 Leverage CPEC and non CPEC related industrial estates and Special Economic Zones
(SEZs) and transform them into hubs of economic activity and value addition.
 Value addition to be a critical focus of industrial policy for export led growth.
 Capacity building and technology upgradation of traditional sectors such as sports
goods, surgical instruments and medical devices, light engineering, food processing,
and textiles/garments, etc.
 Greater emphasis on high technology exports, particularly in areas such as
aerospace, electric vehicles, ship-building, chemicals, engineering and
pharmaceuticals.
 Provision of regionally competitive energy prices to make Pakistani industry
internationally competitive.
 Discouragement of ad hoc policy changes due to its negative effect on investment in
manufacturing sector.
 Innovation and R&D in export-oriented sectors such as textiles and apparels, food
processing, leather, etc.
 SME development and nurturing local endowments & entrepreneurships.
 Product & market diversification, trade facilitation, export enhancement & brand
development.
 Environmental, Social and Governance (ESG) compliant sustainable development of
manufacturing sector keeping Clean Development Mechanism (CDM) in perspective,
and compliance with EU Carbon Border Adjustment Mechanism expected to become
functional in 2026.

Targets

The following targets are being set for industrial and mineral sectors during the Plan period:
 To raise manufacturing share from 12 to 16 percent of GDP,
 To increase higher technology exports from 2 to 4 percent,
 To augment the mineral sector’s GDP contribution from 2 to 5 percent, and
 To increase mineral exports from US$ 0.6 billion to US$ 1.5 billion

Policy Framework for Improving Productivity and Increasing Investment in Production Sectors

Policies and Initiatives

Focus of the 13th Five Year Plan will be to improve the policy framework that has resulted in
the unsatisfactory performance of the industry. The thrust will be on industrial infrastructure
development, SMEs development, skills development, technology upgradation, facilitating
innovation, enhancing the competitiveness of local products, encouraging Foreign Direct
Investment (FDI), promoting exports through new/better market access, competitive
incentives and facilitating G2G, B2C, B2B, C2C interactions. The aim is to boost productivity,
earnings potential, and competitiveness by focusing on five foundations of productivity as
elaborated in the Fig 5 below:

 Developing National Industrial Policy (NIP) and promulgation of consistent allied
policies and regulations to spur the performance of industrial sector and to instill
investor confidence.
 Strategies/ policies/ programmes to provide a facilitative ecosystem for investments,
technology upgradation, innovations and a conducive environment for businesses to
run smoothly and efficiently.
 Development/ upgradation of industrial infrastructure to provide plug and play
environment for investors to set up industrial units.
 Introduction of new emerging tools like Industry 4.0, use of IoT, and encouraging
automation in the areas usually neglected by our industries, will help in quantity and
quality improvements of products.
 Leverage relocation of industrial supply chains leading to increased labour
productivity, growth, and capital deepening with special focus on CPEC that can
provide an avenue for transfer of technology and spillovers from
China in high-end manufacturing of engineering products and electronics like
smartphones and laptops etc.
 Penetration of Electric and Hybrid vehicles and its infrastructure substituting fossil
fueled vehicles in order to promote green technologies, curtail exuberant import bills
and combat climate change. Auto Industry Development and Export Policy 2021-26 will be encouraged to promote localization and reduce the dependence on imported
vehicles.
 Reform of Public Sector Enterprises in terms of subsidies, tax concessions etc. in
order to provide level playing field for private sector.
 Initiatives that help in the reduction of input costs compatible with regional
competitors to reduce the cost of production.
 Facilitating innovation and R&D to make the industrial processes efficient and
facilitate the development of product space leading to diversification and
augmenting productivity via value addition and technology upgradation/ relocation.
 Upgradation of SMEs sector through policy measures.
 The concept of smart factories would be encouraged at the firm’s level for efficient
resource management, effective production, and impactful achievement of
standardization.
 Access to affordable/ easily available subsidized credit, lower interest rates on loans,
Long Term Financing Facility (LTFF) for purchase/import of machinery and skills
training/ development programs to increase contribution in exports.
 Ensure conformation of local products to international quality and standards through
internationally accredited certifications and testing of the products.
 Skill mapping and development of workforce especially for SMEs with a focus on
enhancing competency, quality and employability of the workforce to enhance its
share in export.
 Formulate investment promotion policies/strategies/action plans to channel both
domestic and FDI in export-oriented sectors by identifying policies that are hindering
efficiency seeking investment in tradable sectors that can support export growth.
 Board of Investment will continue to facilitate investors during the entry,
implementation and post–implementation stages. Special Investment Facilitation
Council (SIFC) has also been established to attract investments from friendly
countries in identified sectors through an empowered organization that serves as a
‘single-window’ platform for facilitation through a ‘Whole of Government Approach’.
The primary focus of the SIFC is on investment and privatization, initially targeting
five key areas: Defense, Agriculture, Minerals, Information Technology and
Telecommunication, and Energy through indigenous development and investments.
 The idea of ‘Invest Pakistan’ has been developed through a deep and extensive
consultative process with the private sector, business communities, chambers, public
sector and individual experts by BoI. It is about augmenting the capacity and
functions of BoI in a more structured manner to deliver the best in terms of
investment attraction, promotion and protection. The Invest Pakistan will effectively
coordinate and support ‘time-sensitive’ investment deals. To facilitate investment,
an Implementation Matrix is proposed at Annexure-I.
 Pakistan Regulatory Modernization Initiative (PRMI) will be rigorously implemented
to eliminate cumbersome and unjustified regulatory requirements accumulated over
the years to create a simple, transparent, online and business-friendly regulatory
environment with minimum interaction/physical touch points between businesses
and government departments. Extensive public-private dialogues have already been
initiated to improve the investment climate and will also be vigorously executed
during the Plan period. Additionally, BoI has drafted Pakistan Regulatory Guidebook
and Principle Based Regulatory Framework to harmonize regulatory framework at all
tiers of government. Another important initiative for regulatory mapping of
businesses is Sector Mapping and Regulatory Transformation (SMART). 

 Strategic Trade Policy Framework 2020-25 devised by the Ministry of Commerce is
aimed to optimize the growth of existing sectors, diversify into new sectors and
identify the innovation-driven export sectors for support interventions to achieve
sustainable rapid export-led growth.
 Forge new trade alliances with regional partners to diversify export markets and
boost intra-regional trade especially with Economic Cooperation Organization (ECO)
countries and middle east.
 Alignment of local products and raw materials for instance agriculture (fruits &
vegetables), livestock, mines & minerals, fisheries, etc. with global demand through
value chain development.
 Optimal capacity utilization of Trade Development Authority of Pakistan (TDAP) and
trade attachés for enhancing private sector’s access to global markets, investment
opportunities and facilitating participation in local/international exhibitions, engage
in B2B dialogues, establish partnerships and joint ventures.
 E-commerce policy 2019 focuses on a wide range of things including e-commerce
regulation and facilitation, financial inclusion through digitalization, consumer
protection, global connectivity, etc. Implementation of these initiatives will be
carried on during the Plan period.
 Promoting entrepreneurship, while keeping a fine balance between nurturing startups and their regulation.
 Facilitating the collaboration of academia, research institutions, industry and
government for the promotion of new/marketable ideas and efficiency
enhancement.

In addition to the above policy initiatives, the following action areas will also be key focus
avenues for the Government:

SMEs Development Strategy

The Plan suggests a strategy for boosting up SMEs sector. This strategy emphasizes on
bringing improvements in legal framework; providing support through institutional
framework; conducting sector development studies; access to financial resources through
credit guarantee schemes/equity participation fund; enabling environment for women &
youth entrepreneurs through industry-academia linkages/business networks/incubation
centres; promoting businesses through online portals; and workers’ skills development
through tailor-made courses, etc. Moreover, development of Pakistan Competitiveness and
Productivity index for sectoral assessment is an important initiative.
To provide impetus to the SMEs sector and enhance competitiveness, strategy is to boost
up its productivity and build up capacity to gain an edge in the international market. Some
important measures that can help SMEs in growth and increase its share in exports are:
 Invite foreign buying houses in Pakistan, especially of Textiles
 Professional marketing firms may be hired in key export markets/region of Pakistani
products to improve the country’s image
 Regularly facilitate with market intelligence in export markets to get Pakistani
products integrated into the Sector Value Chain
A detailed action plan for SMEs is at Annex-II, which will serve as a roadmap in achieving key
objectives over the Plan period. Moreover, focus will be on interventions that can emanate
from the contours of approved SME Policy 2021.

Special Economic Zones (SEZs)

Special Economic Zones (SEZs) on low-cost land with plug-and-play facilities will be
developed across the country in consultation with respective Provincial Governments to
create investment opportunities. In this context, development options like PPP/JVs will also
be explored. Another important step will be establishing One Stop Service for SEZs to provide
time bound public services in SEZs in particular, and the country in general. The SEZs will
provide the required infrastructure, including development and utilities across the country
in line with the responsibilities under the SEZs law and rules & regulations. Moreover,
Framework Agreement on Industrial Cooperation under CPEC will be vigorously
implemented as it encompasses relocation of Chinese industries into the SEZs which aims to
facilitate export-oriented industrial relocation and creation of a conducive environment for
Chinese and other foreign companies.

Export Promotion

Promotion of exports through effective marketing, value addition, improvement in local/
international trade infrastructure, improving competitiveness/diversification of the
products especially within textiles & apparel sector and markets, image building by
promoting “Made in Pakistan” branding, improving commercial intelligence, tariff
rationalization, trade policies’ implementation, regional connectivity, compliance of antidumping duties, countervailing duties, setting up Geographical Indications (GI) Cell,
commercial zones with warehousing facilities for export sector inputs and other ancillary
services to facilitate exports and reduce turnaround times, etc. It is pertinent to mention
here that Export Advisory Council is constituted in MoC to provide a platform to public and
private stakeholders to formulate a mechanism for enhancing exports in sectors like
pharmaceuticals, engineering goods, chemicals, iron & steel, glass, auto parts, etc.

International Value Chains

Upgrading of industrial structure as supplier, vendor, manufacturer and consumer is crucial
for Pakistan to hook-up to international value chain. Further, the anti-globalization attitude
coupled with security problems are some of the factors hampering integration of the
manufacturing sector to the international value chain. This needs a paradigm shift towards
encouragement of foreign investment, joint ventures, skill development according to global
needs, improving infrastructure, simplifying trade procedures, fostering innovation &
technology adoption in tandem with R&D, improve policy & regulatory environment,
political stability, promote regional integration and trade unions. Further, a stable and
predictable macroeconomic environment is also necessary for fostering linkages with global
value chains, as international brands and retailers have systematically reduced sourcing
from Pakistan on account of growing macroeconomic volatility/uncertainty and are
increasingly shifting sourcing to regional economies.

Domestic Commerce

Domestic Commerce constitutes a vital part of national economy, contributing nearly 41
percent to the GDP, employing sizeable portion of the labour force and absorbing major
share of domestic investment. Ministry of Commerce drafted the first ever Domestic
Commerce Policy based on the findings of research conducted through surveys, field visits,
reports, comparative analysis of other economies and a thorough, country-wide consultative
process. It is mandated to cover a wide range of key areas including enterprise productivity
and modernization, SME/firm development, social inclusion and gender mainstreaming,
retail and wholesale sector development, local brand development, transportation, storage
and warehousing, real estate, skill development, intellectual property rights protection, and
E-Commerce development and strengthening. An Action Matrix for commerce sector is at
Annex-III.

Gap Analysis – Core Issues of mineral sector

Mineral potential of Pakistan is widely recognized to be excellent but this sector is
inadequately developed. The existing contribution of mineral sector towards national GDP
remained 2 percent which is considerably below the global average of 5% of GDP (Figure 6).
Despite having huge reserves, it is still lagging far behind the world’s mineral market. This is
due to some interconnected and cross-cutting issues like weak and outdated regulatory
regime; lack of infrastructure at mines’ sites; low level of technology; unskilled & semi-skilled
workers; unavailability of financial support; low level of marketing techniques, etc.

Mineral Development Strategy

Pakistan’s mining sector holds significant potential for sustainable development, particularly
due to its critical minerals, which are attractive for foreign investment in support of green
transition initiatives. Much of this potential is in Balochistan, where several projects are
underway. Domestic enterprises have improved their capabilities in exploration, mining, and
beneficiation, but further expansion is needed. The reconstitution of the Reko Diq Project
has bolstered investor confidence. To capitalize on this potential, the Government of
Pakistan (GoP) established the Special Investment Facilitation Council (SIFC) in June 2023.
SIFC, which includes top civil and military leaders, focuses on attracting investment in the
mineral sector. Ongoing negotiations with friendly countries are expected to result in new
investments.

The Plan emphasizes efficient use of geological resources, aligning mineral policies with
institutional mechanisms, and training professionals. Priorities include providing fiscal
incentives, fostering public-private joint ventures, developing geo-parks, and enhancing
collaboration with other countries for technology and capital inflow. An Implementation
Matrix for mineral sector development is provided in Annexure-IV. To improve mineral
sector of country, following interventions are proposed:
 Reporting mineral resources of Pakistan with international standards like JORC,
NI101-43 etc.
 Developing Mineral Contract Management (MCM) and Mineral Auditing System
(MAS) to safeguard national interests and attract international investment through
SIFC
 Encouraging Joint ventures with global partners conditioning technology transfer
coupled with local capacity building agreements
 Institutional reforms through strengthening of mineral related entities of Petroleum
Division, national level policy formulation, updating Acts / Regulatory Framework,
updating Mines & Mineral Rules and identification of grey areas in existing policy and
regulatory frameworks.
 Data Integration and Ease of Doing Business by making National Mineral Data Centre
(NMDC) and all its integrated components will be rolled out in the next 12-15
months.
 Creation of mineral corridors, eliminating red-tapism through setting up Onewindow operation for obtaining mining leases/contracts, and establishing logistic
hubs near mineral clusters.
 Encouraging mining mechanization through setting up of mining equipment &
machinery pool for small miners where warranted.
 Marketing & capacity building through coordination among PAEC, GSP, SoP,
SUPARCO, and provinces for sharing of non-sensitive mineral data & lab facilities;
Capacity building assistance & use of facilities through GSP and/or PAEC; institutional
capacity building; strengthening of lab facilities; studies on fiscal Incentives (Mineral
blocks as SEZs) through review of province-wise major commodities; need based
assistance on project proposal diligence, contract management & marketing etc.
 Efforts to further minerals marketing through (a) standardized reporting of mineral
statistics; (b) promotion of mineral sector potential (seminars/
conferences/exhibitions/newsletters); (c) identification of potential large scale
mining commodities/blocks; (d) deciding business model/strategy for value addition
through setting up JVs with regional partners; strategy for marketing / road shows;
and (e) hiring of 3rd party for marketing, where warranted
 To create linkages among research organizations, industry and academia to develop
and foster innovations, research and nurture sustainable policy and processes.

2. Expanding Agriculture Production and Galvanizing
Agro-Business Potential

2.1 Enhancing Agriculture Production and Competitiveness

Introduction

Agriculture is crucial to Pakistan’s economy, employing over 42% of the workforce and
contributing around 21% to the GDP. It provides essential food and raw materials for
industries like textiles. The sector underpins industrial and service growth and international
trade. However, its momentum was disrupted by COVID-19 and the 2022 floods. Despite
these setbacks, agriculture remains vital for rural prosperity, with a growing focus on the
non-farm sector for rural transformation. Sustainable agricultural development is critical,
given challenges like resource depletion and climate change. Enhancing production
efficiency can increase farm incomes, reduce consumer prices, diversify food supplies, and
create export opportunities. This approach can alleviate hunger and poverty, fostering
inclusive and sustainable economic growth. The Food Security and Research Division
emphasizes controlling food imports and exports, maintaining quality standards, and
managing rice export logistics.

Review of 12th Five Year Plan (2018-23)

Earlier five-year plans for the agriculture sector included a range of strategies and objectives
that aimed at fostering sustainable development, enhancing productivity, ensuring food
security, and addressing challenges faced by farmers. Due to natural calamities and variation
in weather patterns, production of crops was affected and so did the allied sectors with
agriculture. Due to the factors the objective of making Pakistan a net food exporting country
could not be achieved; rather we had to import many essential food commodities to fulfill
the consumer needs and in turn the major objective of reducing the food insecurity by 30
percent got affected as well. Overall, the terms of trade were affected and the objective of
maintaining the pace in improving the terms of trade was misplaced. One of the major
cushions against the dismal performance of major agricultural sectors in prolonged periods,
has always been enhancing the contribution of non-farm sector. But unfortunately, in overall
true terms the objective of increasing the on-farm rural income from 61 to 70 percent for
rapid rural transformation was also affected due to aforementioned factors.
During the plan some of the general aspects that were considered are given below:

Agricultural Productivity:

Plans outlined measures to increase overall agricultural productivity through the adoption
of modern technologies, improved farming practices, and the use of high-quality seeds and
fertilizers.

Crop Diversification:

Efforts were made to diversify crops to reduce reliance on a few staple crops. This included
promoting the cultivation of alternative crops suited to different agro-climatic zones.

Irrigation and Water Management:

Improving irrigation systems and efficient water management practices were often key
components. This was crucial for ensuring a consistent water supply to crops, especially in
areas prone to water scarcity.

Market Access and Infrastructure:

Enhancing market access for farmers was a common goal. This involved improving
transportation infrastructure, storage facilities, and market linkages to help farmers get their
produce to consumers more efficiently.

Technology Adoption:

Earlier plans focused on promoting the use of technology in agriculture, such as precision
farming, modern machinery, and digital tools for farm management.

Support for Smallholder Farmers:

Measures to support smallholder farmers, who formed a significant portion of the
agricultural community, were included. This involved providing access to credit, insurance,
and extension services.

Environmental Sustainability:

Recognizing the importance of sustainable practices, plans included initiatives to promote
environmentally friendly farming methods, use of Bio-fertilizers, reduce chemical inputs, and
protect natural resources.

Livestock and Fisheries Development:

In addition to crop-centric strategies, comprehensive plans often addressed the
development of the livestock and fisheries sectors, including animal health, breeding
programs, and sustainable fishing practices.

Research and Development:

Investment in agricultural research and development was crucial for innovation. Plans
allocated resources to support research institutions working on crop improvement, pest
management, and other agricultural challenges.

Climate Change Adaptation:

Given the impact of climate change on agriculture, plans incorporated measures to help
farmers adapt to changing weather patterns, reduce vulnerability to extreme events, and
build resilience. Hence, assessing the national needs, the plans were well conceived and
were taking care of international obligations for the export-led growth of the sector. The
growth rate of earlier periods has been depicted in Table 1.

As evident in Table 1, the overall picture of agriculture growth manifests progress in the
positive direction for most of the sub-sectors. However, for the crop sector, the negative
trend during 2018-19 was attributed to the natural calamities, coupled with low input supply
afterwards. However, except crop sector, during the year periods from 2019-20 to 2022-23,
the growth data depicts a positive trend. During these periods, the most impressive growth
was observed for the livestock and fisheries sub-sectors, which contributed to the overall
agriculture sector.

13th Five Year Plan (2024-29)

Sectoral Issues

Pakistan’s agriculture sector holds significant potential, but outdated growth strategies are
hindering its progress. If these strategies persist, national food security and ambitious goals
like the Five-Year Plan and Vision 2025 could be jeopardized. The rural economy, with 40-
50% of the population involved in farming, needs diversification to create jobs and reduce
migration. Urbanization and climate change are transforming agriculture, with fertile land
being converted for residential and industrial use. Issues such as water logging, salinity, and
small land holdings further impede agricultural innovation and productivity.
Poor soil quality and widespread nutrient deficiencies negatively affect crop yields. Despite
research providing solutions for water resource optimization, financial constraints limit
farmers’ ability to adopt these solutions. High water losses in irrigation and the untapped
potential of hill torrents worsen water scarcity and restrict cultivation expansion.
There is a significant yield gap between average and progressive farmers due to funding
constraints, high production costs, and low farm-level investments. Addressing these issues
requires modern machinery, quality seeds, balanced fertilizer use, and improved irrigation
practices. The cotton sector, crucial for industry and exports, faces challenges such as
inappropriate technology, poor seed quality, and competition from sugarcane. Similarly, the
livestock sector has underperformed over the past two decades. The review for the last two
decades in this regard is as follows:

Dairy:

The dairy sector is a crucial part of Pakistan’s economy, with the value of milk surpassing
that of wheat, rice, maize, and sugarcane combined. In 2022-23, Pakistan had 55.5 million
cattle and 45 million buffaloes, with about 30 percent being milking animals. Despite
contributing 7 percent of the world’s animal population and 20 percent of the buffalo
population, Pakistan’s share in global milk production is only 5.5 percent due to low yields,
averaging 1.62 tons per animal annually—62 percent of the global average. The low genetic
potential of animals results in low milk productivity, and milk production costs are about 30
percent higher than in India. Only 5 percent of Pakistan’s milk is marketed through formal
channels; the rest is sold raw by informal agents, with 15-20 percent of production lost due
to poor storage and handling. Price control policies have hindered private investment in
livestock productivity.
Since 2005, private-sector-led dairy development initiatives have led to improvements such
as herd enlargement, import of high-quality milk germplasm, increased animal productivity,
enhanced milk collection, processing, and marketing, and better supply of dairy inputs. Over
12,000 commercial dairy farms are now operating in Pakistan, and the Ministry of National
Food Security and Research provides data on milk production trends. species-wise milk
production available for human consumption for the last 1.7 decades is shown in the below
figure 1.
The dairy industry in the country is mainly dominated by private sector entities, including
multinationals and national companies. They primarily produce dairy commodity products
such as UHT fluid milk, milk powder, yogurt, butter, ice cream, cream, butter oil, and cheese.
About half a million tons of milk are available for processing, with 50% used for UHT milk,
40% for powdered milk, and the rest for pasteurized milk, yogurt, cheese, and butter.
Although there are 38 major dairy plants in the country, only 13 are operational.

Meat:

In 2022-23, global beef production reached 59.573 million tons, with 12.1 million tons
exported. Brazil was the top exporter, followed by India, Australia, the US, and New Zealand.
Major beef importers include China, Japan, Korea, Canada, the EU, Indonesia, the
Philippines, Malaysia, Vietnam, North Africa, and the GCC. Pakistan, the 9th largest producer
and consumer of beef, has a 100 percent halal production base and access to 470 million
halal meat consumers in Afghanistan, Central Asia, and the Middle East. The country has
significant export opportunities, especially to China, Vietnam, Indonesia, and Malaysia,
which are expected to have the highest cumulative demand for meat products over the next decade.

Pakistan’s average beef carcass weight is 125 kg, about 70 percent of its potential yield.
Optimizing production efficiency and adopting global best practices could increase this to
180 kg. Underweight slaughtering of calves’ results in substantial economic losses,
highlighting the need for a policy on minimum slaughtering weight. The meat industry faces
challenges such as high production costs, inconsistent animal quality, low carcass yields,
limited value addition, absence of a grading system, and export restrictions due to Foot and
Mouth Disease (FMD). Despite these issues, private sector investment in processing has
enabled the supply of various export products. There are 35 registered FS-certified export
abattoirs in Pakistan with advanced packaging capabilities. The industry’s annual capacity is
247.5 thousand tons of beef and 82.5 thousand tons of mutton, valued at 1.65 billion USD,
though capacity utilization is below 30%.
Annually, 10-12 million young cattle and buffalo male calves are produced, with 8-9 million
entering the supply chain. Implementing technologies such as calf weaning and feedlot
fattening could produce an additional 500 thousand tons of beef, potentially worth around
2 billion USD, compared to current exports valued at 342 million USD.

Poultry:

During the past five years, when the main livestock and dairy sectors faced challenges, the
poultry industry stepped up, sustaining overall sector growth by meeting national consumer
demand with relatively affordable prices. It has also bridged gaps during poor crop
performances, particularly in pulses. The poultry sector is highly technology-oriented,
encompassing both commercial and backyard operations. Maize and soybean are key
expenses in poultry production for energy and protein, respectively. There is a need to
develop a rationalized national-level policy for not only sustaining the production of maize
and soybean in the country and its provision to the poultry feed, but prudent policies are
also required for the import of these ingredients on a need basis for consistency in the
poultry sector growth. Furthermore, taxes and duties on the import of poultry products may
be reduced and competitive support packages like those offered on other export industries
may be offered to the poultry sector to make the products compatible in international
markets.

Small Ruminants:

Sheep and goats are poor men’s livelihoods and food security options, with the added
benefit of serving as a bank to sell at the time of their dire needs. Sheep and goats provided
1088 thousand tons of milk, 799 thousand tons of mutton, 63.7 million skins, 49 thousand
tons of wool and 31.8 thousand tons of hair, in addition to being a major source of casing
during the FY 2022-23. Additionally, sheep wool from Baluchistan and other concentrated
regions is a significant resource for value addition.

Fisheries and Aquaculture:

The 990 km long coastline of Pakistan is home to many types of fisheries and crustaceans.
The most common are prawns, shrimp, lobsters, crabs, cuttlefish, ribbonfish, squids and
many other types of fish. They are regularly exported to Europe, the USA, the Far East, the
Middle East and some other countries. Pakistan’s total fish production is about 0.807 million
metric tons, of which 62 percent comes from marine fisheries and 38 percent from inland
fisheries and aquaculture. Fish consumption in the country is currently about 2 kg per year
per capita, compared to a global average of 17 kg. Pakistan exported fish products worth
355 million USD during the nine months of FY 2022-23. Development of value chains like fish
hatcheries, commercial fish feed and training is needed to develop this sector.

China-Pakistan Economic Corridor (CPEC) Opportunities:

CPEC presents opportunities to enhance agriculture output through infrastructure
improvement, advanced production technologies, and market sector development. Shortterm focuses include improving yields, resource utilization, seed improvement, food
processing, livestock breeding, farm mechanization, and agriculture market development.
The horticulture, livestock, and fisheries sectors require attention to enhance productivity,
genetic diversity, and value chain development. Poultry, a well-developed subsector, could
benefit from restructuring regulatory frameworks, disease control, and genetic intervention
in rural poultry.

Terms of Trade (ToT):

Worsening Terms of Trade (ToT) and declining Total Factor Productivity places agriculture at
a disadvantage compared to industry. Technical inefficiencies, particularly in small and
fragmented land holdings, poor input utilization, and weak farmer-academia linkages, result
in low productivity and rural poverty.

Overall Food Security:

Food security is a concern despite the surplus production of essentials like wheat and sugar.
Approximately 18-20 percent of the population faces undernourishment, exacerbated by
high population growth, rapid urbanization, low purchasing power, price fluctuations, erratic
food production, and inefficient distribution systems. Conflicts, natural disasters, and
migrations further impose stress on food security. Malnutrition levels, particularly severe
stunting, wasting, and underweight, are elevated in rural areas and specific regions. Half the
population consumes less than the required amounts of vitamin A and iron. Despite
spending 40 percent of household income on food, marginalized populations in
mountainous, desert, and coastal areas suffer disproportionately from malnutrition and
social deprivation. The food trade balance has deteriorated, making Pakistan a net food-importing country with a high deficit.

Objectives 13th Five Year Plan

The objectives outlined in the 13th five-year plan are crafted with the aim of not only
addressing immediate concerns but also fostering sustainable, transformative, and inclusive
growth in the agricultural landscape. The summarized objectives are given as follows:
 Achieve an optimum growth rate in the agriculture sector on a sustainable basis
 Improve agricultural terms of trade
 Make Pakistan a net food-exporting country
 Reduce food insecurity
 Rapid Transformation of the Rural Non-Farm Sector:
 Food System Transformation
 Access to Markets

Targets

The comprehensive approach reflects a commitment to balancing and optimizing the
contributions of different agricultural components. The targets set for the subsectors
indicate a multifaceted strategy, encompassing livestock, crops, fisheries, and forestry, to
realize sustainable growth and bolster the broader economic landscape.
In essence, the strategy for agriculture growth in Pakistan’s 13th Plan period aligns with the
nation’s aspirations for economic advancement.
Policy Interventions/Programs and Initiatives
4RF (Resilient Recovery, Rehabilitation, and Reconstruction Framework) for Food and
Agriculture:
The 4RF for the food and agriculture sector in Pakistan will likely focus on rebuilding and
strengthening the resilience of agricultural systems. This will involve initiatives to recover
lost agricultural infrastructure, rehabilitate farmlands, and reconstruct agricultural practices
that promote long-term sustainability. Additionally, efforts will be directed towards
introducing technologies and practices that will enhance the sector’s ability to withstand
future shocks, whether they are related to climate change, natural disasters, or other
challenges.

Strengthening the Government’s Role as Regulator:

Efforts will be directed at implementing the Seed Act 2015 and the Plant Breeders Rights Bill
to establish a modern seed industry in the private sector. Quality control mechanisms for
pesticides and food items will be strengthened to ensure the supply of quality inputs and
products. Important measures will be taken for the revival of the cotton sector.

Rationalizing Tax Structure:

A review of the overall tax structure on agricultural inputs will be planned to reduce the cost
of production and improve farmers’ income. This includes assessing the tax structure on
items like cotton to align with regional and global economies.

Optimizing Targeted Subsidies:

A mechanism will be adopted to directly provide subsidies to small farmers, utilizing IT-based
solutions to ensure effective and targeted subsidy distribution.

Promoting Food Commodities:

Policies and programs will be developed to support the production and marketing of crops
like pulses, tea, oilseeds, and soybeans, reducing dependency on imports. Consideration will
be given to protecting growers’ interests during the implementation of import policies,
especially during harvest times.

Improving Resource use Efficiency:

Integrated resource management approaches, skills development, financial support, and
modern technologies will be employed to enhance the efficiency of land, water, and other
inputs. Saline agriculture will be explored, and public-private partnerships will be promoted
to maximize land and water productivity

Promoting Modern Technologies:

The government will play a proactive role in promoting biotechnology, farm mechanization,
and the use of modern tools and technologies such as artificial intelligence, machine
learning, and the internet of things in agriculture. The initiative of “Digital Dera” and modern
technologies like establishing internet societies will be on the way to help creating
awareness among all relevant stakeholders.

Equity and Efficiency in the Agriculture Credit Market:

Policies will be formulated to ensure equitable and timely disbursement of institutional
credit to enhance investments, particularly in high-value and value-added agriculture.
Information Technology in Agriculture Extension Services:
Information technology will be leveraged for agriculture extension services, including
communication, skill development, farm management, monitoring, marketing, and quality
control.

Special Investment Facilitation Council (SIFC):

The Specialized Investment Financial Corporation (SIFC) aims to facilitate corporate farming
and advance agricultural modernization in Pakistan. By attracting both domestic and foreign
investors, SIFC seeks to enhance agricultural productivity, create jobs, and stimulate
economic growth. Corporate farming involves large-scale, mechanized agricultural
operations managed by corporations, focusing on maximizing profitability through businessoriented agricultural production. The government has granted corporate agri-farming the
status of an industry under a new incentive package.

Land Information and Management System-Centre of Excellence (LIMS-CoE):

LIMS-CoE, another initiative towards the Green Revolution, is believed to revolutionize the
agriculture sector in the country by utilizing 9 million hectares of uncultivated land. LIMSCoE has been established under the Director General Strategic Projects of the Pakistan Army,
and it will ascertain foreign direct investment in the agriculture sector in Pakistan.

China-Pakistan Economic Corridor (CPEC):

Agricultural development in Pakistan is just one of the many facets of the CPEC. It will
promote corporate farming and boost the agricultural productivity of Pakistan. CPEC’s
infrastructure projects can reduce the transportation time and cost of agricultural produce.
The Special Economic Zones (SEZs) are being considered to attract high-quality foreign direct investment by encouraging the relocation of industries not only from China but also from
other countries, creating job opportunities, and transferring advanced technology. 

Livestock Sector’s Improvement

Livestock is a vital sub-sector of Pakistan’s agriculture, tracing its significance back to the
early Indus civilization. Today, it contributes 62.68 percent of the agricultural value added
and 14.36 percent to the national GDP, growing at 3.78 percent during 2022-23. Over eight
million rural families rely on livestock for 35-40 percent of their income, highlighting its
critical role in the rural economy. Livestock accounts for about 2.1 percent of Pakistan’s total
exports and generates employment for over 2 million people. The sector includes 220 million
ruminants and 1.9 billion poultry birds, producing 55 billion liters of milk, 5.5 billion kg of
meat, and 24 billion eggs annually. These products are essential for nutrition, especially for
infants and pregnant mothers, helping reduce stunted growth and anemia.
Despite a global livestock market worth approximately 200 billion USD, Pakistan’s meat
exports are only 340.9 million USD, representing 0.22% of the market. This is due to the lack
of specific beef breeds and low carcass yields. To boost exports, the Ministry of Commerce
has prioritized the meat sector, aiming to meet international standards for food safety and
halal products. Climate change poses a significant challenge, affecting sustainable livestock
farming and environmental health due to greenhouse gas emissions, land degradation, and
water pollution. The livestock sector’s policy and development priority initiatives for the
13th five-year plan under the ambit of 5 E, 4F and SIFC framework are as follows:
 Conducting a National Livestock Census
 Deregulate the Milk and Meat Markets
 Grant Livestock Industry Status
 National Policy for Climate-Resilient Livestock Production
 Policy for Soybean Production & Import Regulations
 Policy for Minimum Slaughtering Weight of Animals
 Development of national poultry production and trade policy
 Development Initiatives for the Livestock Sector
 National Program for Foot and Mouth Disease (FMD) Control in Pakistan
 Vaccine Production for Emerging Poultry Diseases
 Genetic Improvement Through Improved Reproductive Technologies
 Development of Climate-Resilient Fodder Seed and Livestock Production
 Export enhancement of Meat products and Meat Grading System
Figure 2: Integrated meat value chain development model for Pakistan
Fostering the potential markets for Pakistani meat products in rapidly developing Asian
economies, including China, Malaysia, Indonesia, Egypt and Russia, along with the already
targeted markets of the GCC should be a key consideration in exporters’ marketing
strategies.

Value addition to the wool industry:

The wool industry is an important source of income and jobs in rural Balochistan, which has
an estimated 12 million sheep and earns US$5 million in annual revenues from wool clips.
To increase incomes and employment opportunities, Balochistan farmers may be helped to
adopt modern wool-related practices, such as washing wool before shearing, classifying
colour-graded wool, grading fleeces, and producing even-length fiber through mechanical
shearing. To help women earn more income the women may be trained in activities they
can do from their homes such as washing the fleece, and sorting. FAO estimates that with
technology-oriented interventions, the revenues of the Balochistan wool industry can be
increased by up to US$20 million a year.

Rangeland development – Corporate Livestock through the Green Pakistan Initiative (GPI):

Pakistan has a geographic area of 79 million hectares (1H= 2.47 acres). Out of that, 15.7
million hectares are cultivated. Besides, more than 8.2 million hectares are classified as
culturable waste (uncultivated farm area that is fit for cultivation). The highest percentage
of rangeland land is located in Balochistan (46.6 percent) followed by Sindh (19.5 percent),
Punjab (17.8 percent) and Khyber Pakhtunkhwa (16 percent). Considering the large
culturable waste in the country (deserts, riverine belts, rangelands), new land development
is essential to make our country food secure and to reinvigorate the economy 12.
Commercial-scale dairy farms, industrial feedlots, poultry and small ruminant (sheep or
goat) farms, silage and hay production inclusion in the Green Pakistan Initiative (GPI) may
transform the livestock and dairy sectors in the next decade. Corporate livestock has a higher
potential for vertical integration, supply chain management and marketing options. Farming
in livestock is linked to national and export market requirements as well as contributes to
rural development, alternative sources of income and youth employment meant to create
jobs and address rural poverty.

Promote shrimp farming:

The National task force for livestock and fisheries under M/o NFS&R anticipated utilization
of high saline water land for aquaculture and fisheries development. Promote shrimp
farming through Public Private Partnership or support to the private sector for technology
transfer, and capacity-building activities and further invite foreign investment in aquaculture
production.

Digitalization of livestock services and entrepreneurship for youth & women:

The livestock and poultry sectors offer substantial opportunities for youth and women
entrepreneurship, with well-defined business models ready for support. Integrating digital
technologies, such as e-commerce for livestock trade and input supplies, can transform
cattle and feed markets. Using feed formulation software and farm management programs
can promote climate-smart practices. Technology-driven entrepreneurship in these sectors
can create more employment opportunities for young graduates and women.

Market Reforms:

Private Sector Participation:

The plan underscores the overhaul of agriculture markets to
engage the private sector in infrastructure and logistics, potentially boosting efficiency and
creating investment opportunities in commodity markets.

Digital Platforms and Intelligent Villages:

Advocating for e-platforms and the establishment
of intelligent villages at the Union Council level can streamline the efficient disposal of
innovative value-added products.

Policy Evaluation for Essential Commodities:

: A pinpointed review of policies concerning
wheat, sugar, and fertilizer is recommended.

Adjustment of Price Controls:

The strategy proposes the elimination or adjustment of
counterproductive price controls.

Orientation Towards Long-Term Policies for market development:

The plan urges the
adoption of enduring policies instead of impromptu measures.

Food Export:

Recognition of Comparative Advantages:

Acknowledging Pakistan’s comparative advantage
in the food market, the plan suggests concentrating on IT and food exports through
fortification of Value Chains.

Integration with CPEC for Food Security Projects:

Emphasizing the reinforcement of food
value chains, quality standards, and adherence to Sanitary and Phytosanitary (SPS) measures
is imperative. Integration with the long-term agriculture development plan of the ChinaPakistan Economic Corridor (CPEC) is underscored. This involves improving storage,
standardization, market accessibility, and exports. Collaboration with Chinese
entrepreneurs and the establishment of agro-based Specialized Economic Zones (SEZs) can
propel the agriculture sector.

Rural Transformation:

Rural Enterprise Strategy:

The proposition of a rural enterprise policy is put forth to expedite
rapid rural transformation.

Access to Finances:

Ensuring access to financial resources for rural enterprises takes
precedence. Collaboration with indigenous financial institutions through market-oriented
lending products can fuel the development of rural enterprises.

Skill Enhancement Initiative:

A skill development program is recommended to nurture
entrepreneurial and technical skills. Collaboration between universities and technical
institutes can cultivate a skilled labor force, promoting entrepreneurship and employment
in rural enterprises.

Development Based on Clusters:

The plan supports the current effort to develop feasibility
studies for agricultural commodities through a cluster development approach.

Integration with CPEC:

The plan highlights the potential of CPEC to boost Pakistan’s
agriculture sector at the rural level. Collaboration with Chinese entrepreneurs, the
development of processing facilities, and the operation of storage and transportation
systems can further enhance rural development.

Execution of National Food Security Policy:

The implementation of the national food
security policy is a pivotal objective. This policy, developed with the involvement of all
stakeholders, will be instrumental in addressing the prevalence of undernourishment and
malnutrition.

Food Security Information System:

Establishing a dynamic Food Security Index to report on
emerging food security issues will aid in planning. This information system can contribute to
better decision-making and proactive intervention.

Enhancing Food Accessibility:

Efforts to enhance physical access through road networks and
market infrastructure are crucial. Additionally, the government’s role in providing affordable
food to consumers without adversely affecting farmers’ profitability is highlighted.

Promoting Awareness:

Beyond affordability, emphasis is placed on awareness of nutritional
aspects. Efforts to create awareness through the media and other communication channels
can contribute to building a healthy nation and addressing malnutrition.

Public Investment:

Backing R&D Organizations: The plan proposes support for investment in R&D organizations,
providing infrastructure and enforcing a conducive regulatory framework. This can drive
innovation and technological advancements in the agriculture sector. Development and
Strengthen of Institutions and Bodies: The plan aims to enhance the role of various
organizations and committees under the National Food Security and Research Division. Key
entities include the Pakistan Agricultural Research Council, Plant Protection Department,
Federal Seed Certification and Registration, PASSCO, Agricultural Policy Institute, animal
quarantine departments, and various development boards for dairy, livestock, fisheries, oilseed, fertilizer, and cotton.
Streamlining Targeted Subsidies: Emphasizing development support to optimize the
utilization of targeted subsidies. This involves improving international linkages,
strengthening national coordination systems, and acquiring high-tech solutions to enhance
the effectiveness of public investments.
Allocation of Agriculture GDP: Allocating 1.0 percent of agricultural GDP for new investments
shows a commitment to modernizing Pakistan’s agriculture sector and transforming the
rural economy. The strategy emphasizes the roles of various sub-sectors, particularly crops
and livestock, with the livestock sector contributing 59 percent to agricultural growth, the crop sector 37 percent, and fisheries and forestry 4 percent. This diversified approach aims
to propel growth across all sub-sectors. Key focus areas include land and water
management, technology and inputs, productivity enhancement, agro-ecological zones and
clusters, market development, agro-based industry, and research system reform. By
adopting these approaches, the plan aims for positive outcomes in the food and agriculture
sector.

3.1  ICT – Digital Transformation for a Robust Growth

Introduction

Information and Communications Technology (ICT) offers the most promising and easily attainable opportunities within the broader realm of science, technology, and innovation. The Ministry of Information Technology and Telecommunication has taken the lead in setting a National Agenda on 4th Industrial Revolution and the digital economy by establishing National Incubation Centre’s (NICs) in all the provinces and the federal capital. The Ministry of Planning, Development, and Special Initiatives (MPDSI), the Higher Education Commission (HEC) and other provincial actors are providing support through major skills and research initiatives. Among other priorities, the plan focuses on the digital economy and citizen empowerment. The 13th Five Year Plan (FYP) aims to build on a series of ongoing initiatives to shape the digital economy eco-system.

Review of 12th Five Year Plan

Despite of slow economic growth and inflationary pressures, Pakistan’s telecom sector demonstrated steady expansion throughout FY 2018-23. Currently, there are over 194 million SIMs/subscribers verified through biometrics, with mobile coverage reaching more than 90% of the populace. Broadband subscribers have surpassed 124 million, indicating a 56% broadband penetration rate. Moreover, 3G and 4G mobile signal coverage is accessible to over 78% of the population, and annual mobile broadband data usage has surged to 8,970 petabytes, reflecting a yearly growth of 31%. The increased utilization of telecom services led to the industry achieving record-high revenue of PKR 694 billion in FY 2018-23, with tax collection amounting to PKR 223 billion. (PTA, 2018-2023)

Currently, 78% of Pakistan’s population receives coverage from 3G signals, while 75% benefit from 4G signals, granting Pakistanis access to internet and broadband services at rates more affordable than those in neighboring regions. Notably, the cost of 1GB mobile data has decreased to 0.58% of the Gross National Income per capita, well below the UN Broadband Commission’s recommendation of less than 2% (Source: ITU/A4AI). The National Broadband Policy 2021 sets ambitious goals, aiming for 80% broadband penetration by 2025 and 90% by 2030. Additionally, it targets an average broadband speed of over 30 Mbps by 2025 and aims reduce the average price per gigabyte by 50% within same timeframe. The Pakistan Telecommunication Authority (PTA) in its performance agreement with the Prime Minister’s Office, set targets of 51% broadband penetration by June 2022 and 55% by June 2023. PTA surpassed the latter goal, achieving 55% by July 2022. According to the Speed test Global Index (July 2022), Pakistan’s average mobile broadband download speed of 20.84 Mbps exceeds those of neighboring countries like India (19.57 Mbps) and Bangladesh (16.33 Mbps). These broadband objectives are further supported by coverage and Quality of Service (QoS) obligations included in 4G cellular mobile licenses, ensuring the delivery of high-quality 4G services to subscribers.

SDG’s Status and Targets for 12th Five Year Plan

Regarding the Sustainable Development Goals, both tele density and other telecom indicators have shown an upward trend. The current placements are as follows:

The Plan outlined a public sector investment of Rs.63 billion, with 83% of this utilized by the federal PSDP and provincial ADPs. Including private sector contributions, the sector’s performance surpassed expectations. The goal was to expand the ICT industry from US$ 2 billion to US$ 8 billion. In its first auction for 3G and 4G networks on April 23, 2014, Pakistan raised US$ 903 million and US$ 210 million, respectively, with four foreign-owned companies winning the bids. The spread of broadband mobile internet was expected to foster various developmental benefits of ICT technologies. The implementation of e-Government across federal and provincial ministries aimed to enhance government efficiency, transparency, and responsiveness. As of February 2023, tele-density in Pakistan was 87.7%, with 193.85 million mobile subscribers, reflecting a slight annual decrease. However, 3G/4G broadband penetration reached 57%, with 127 million subscribers, marking an increase of 8.6 million over the year.

Initiatives during 12th Five Year Plan Period:

e-Government and Citizen Services

The progress of e-Government in Pakistan’s Federal Government has been hindered by organizational, staffing, capability, and funding issues within the National IT Board (NITB). The e-Office Suite project, intended for 40 ministries and departments, faces delays due to lack of equipment, training, and prioritization. While these capacity issues are being addressed, the Punjab Information Technology Board (PITB) and KP Information Technology Board (KPITB) have made significant strides in digitizing provincial government operations. notably improving efficiency, effectiveness, and transparency in various sectors such as health, education, and police.

IT exports and Freelancing

The IT/ITeS industry in Pakistan has grown at a compound annual growth rate (CAGR) of 25.6% over the past seven years, reaching USD 3.9 billion in FY22. With USD 1.8 billion in export revenues, the industry accounts for 31% of Pakistan’s total services exports.
Freelancing in Pakistan has seen a significant rise, making it the fourth fastest-growing freelance market globally, with a 47% increase in earnings. Government initiatives, such as Punjab’s e-Rozgar centers and national training portals, aim to enhance freelance income and participation. E-commerce has doubled annually during the last four years, reaching an estimated USD 1 billion in June 2023, with substantial contributions from Chinese companies like Alibaba.

Government efforts to enhance IT exports through the Pakistan Software Export Board (PSEB) have been underfunded and less effective than necessary, despite limited success seen in programs like the PM ICT Internship. Increased investment in ICT and support for ICT graduates are essential to fully realizing the sector’s potential. The startup and entrepreneurship sub-sector in ICT has progressed significantly. The Punjab Information Technology Board (PITB) launched Plan, Pakistan’s first public sector incubator, which inspired the creation of several private incubators. The Ignite National Technology Fund established National Incubation Centers (NICs) in Islamabad and each provincial capital, processing about 200 startups annually. Currently, there are eight NICs across Pakistan. Additionally, the Government of Pakistan has approved a Venture Capital Fund with an annual allocation of Rs. 5 billion to support startups.

Telecommunications

The telecom and broadband services are driving the expansion of ICT usage in Pkasistan. The number of 3G/4G subscribers i n c r e a s e d rapidly from over 56 million in June 2018 to over 126 million in November, 2023. By the end of February 2023, the number of 3G and 4G users reached 124.16 million.
Over the past few decades, telecom has been a significant enabler of economic development, serving not only as a platform technology for other sectors and society but also as a direct contributor to foreign direct investment. The telecom sector’s remarkable progress resulted in a record-high revenue of Rs. 850 billion in FY 2022-2023.

The 13th Five Year Plan:

Sectoral Issues

Major sectoral issues are listed as follows:
i. There is a critical need to enhance the e-Government infrastructure at the Federal level. This involves building essential capacities in various domains to deliver high quality services to f e d e r a l g o v e r n m e n t entities at commercial or near-commercial rates. Additionally, a focused effort is required at the national level to create a National Data Backbone, which include an (Open Data platform and a National Spatial Data Infrastructure.
ii. The growth of firms undertaking IT exports has been constraints by a shortage of physical space. Establishment Special Economic Zones (SEZs) and Export Processing Zones (EPZs) focused on IT and related Exports is necessary.
iii. Over the last two decades,, Pakistan has faced an “image problem,” primarily due the law-and-order situation and lack of aggressive measures to address it.
iv. There is severe shortage of skilled Human Resource that are IT-Industry ready to seize global opportunities in the emerging areas such as AI/ ML, blockchain, high-end BPO, and smart technologies. There is a urgent need to create an government entity responsible for championing Leveraging CPEC’s potential as a catalyst for entrepreneurial and startups growth, particularly in the IT hardware and products sector, is essential.
v. There is need for an International Payment Gateway to support innovation in digital, fintech, and eCommerce.

Objectives

The objectives of ICT sector in the 13th FYP are outlined below To leverage and benefit from productivity improvements in government, business, and society as well as enhancements in quality of life of ordinary citizen. This include the disruption of traditional processes and systems through rapid adoption of information and communication technologies particularly digital technologies. To fully exploit the potential of information and communications technology as the quickest and most reliable pathway for wealth creation through high tech software exports, certifications, trainings and freelancing in the emerging “gig economy.”

• To unleash the power of entrepreneurship – particularly in the ICT sector, as key strategy for employment and wealth creation.
• To build upon nearly two decades of deregulation and recent awarding of 3/4G licenses to further expand and position Pakistan as a leading nation in 4/SG and Broadband technologies in the region.

Major Initiatives for 13th Five Year Plan

1. Strengthening of e-Government infrastructure at the Federal level. The National IT Board will be restructured to make it a “change management” agency with extensive experience of project definition, management, and oversight.

2. Capacity
enhancement of federal government entities to deliver high quality services at commercial or near-commercial rates. A national policy on data protection will be developed, which in turn will dictate the creation and usage of national data center and a national cloud providing a world-class service at competitive prices.
3. Initiation of a national program to enable citizen feedback and citizen-government interface This has already been piloted in Punjab and could be replicated at the National level. The program will be housed at an appropriate level within the federal government by NITB and must track citizen satisfaction with public services over time. Focused efforts will be made to create a National Data Backbone (Open Data platform and National Spatial Data Infrastructure) and make it available for innovators (within government and private sectors) to reach out and create services for citizens. This will require capacity enhancement of national institutions including NITB and its collaboration with entities such as SUPARCO, Survey of Pakistan, NADRA, and the Planning Commission to provide real-time access of geo-tagged government data to a range of stakeholders starting from a base layer for citizens all the way to senior policymakers in the government to enable intelligent use of information in policymaking.

IT Exports and Freelancing

IT exports and freelancing are the most immediate and effective pathways to wealth creation through information technology. While Pakistan’s IT exports have steadily grown over the last two decades, sector’s overall performance has been less than ideal. A significant portion of IT export revenue does not enter the country through official channels. Several underlying issues contribute to this lack of progress, which will be a focus of the 13th FYP. Freelancing has also grown considerably in recent years, demonstrated its potential to bring foreign exchange revenues through the export of services to the global market.
Set up Special Economic Zones (SEZs) and Export Processing Zones (EPZs) focused on IT and related Exports. To address the shortage of physical space constraining growth of IT export firms, the 13th FYP seeks to establish SEZs, and EPZs focused on IT export and related exports. These zones will offer incentives and currency control liberalization for for exporting companies. The qualifying requirement for IT companies eligible for export rebates and other currency-related relaxations may be brought down from 100% to 75-80% of exports to allow these companies to also contribute to the local market.
Procurement reforms to provide domestic experience for local and exporting firms. The 13th FYP aims to reform the public procurement system to enable relatively inexperienced IT firms to compete for local contracts, gain domestic experience, and mature their product locally before entering the international market. A small percentage of public procurement can be mandated for small and local IT firms, and large, critical procurement contracts may require mandatory local partnerships and providers.

Brand Pakistan Initiative: The Brand Pakistan initiative will launch a major campaign to position Pakistan as an attractive outsourcing destination, addressing customer concerns about safety and improving its international image. This campaign would be a public-private partnership led by the private sector with government oversight.
Expanding IT Human Resources: To support export growth, significantly increasing the number of IT and computer science graduates is crucial. Pakistan currently has over 300,000 English-speaking IT professionals and produces more than 75,000 IT graduates annually. Expanding high-quality programs and creating new ones, especially in smaller cities like Hyderabad, Faisalabad, Multan, Bahawalpur, Peshawar, and Quetta, is essential.
21st Century Global Skills Initiative: The 21st Century Global Skills Initiative aims to train 100,000 youth over five years in advanced areas such as AI, blockchain, big data, cybersecurity, e-commerce, cloud computing, and enterprise automation. This initiative seek to bridge the skills gap, provide globally recognized certifications, and enhance the local software industry’s capabilities.
Freelancing and Digital Work Programs: Freelancing and digital work programs will expand training and skill development for freelancing, targeting fresh graduates, unemployed youth, women, and differently-abled individuals. Initiatives like the Ministry of IT and Telecom’s Digiskills.pk aim to train one million youth, fostering a freelancing revolution in Pakistan.
Entrepreneurship and Startups: A national startup initiative willsupport startups across all sectors, including IT, sports, textiles, logistics, medical devices, and agriculture. This includes creating an annual national startup competition, startup support grants, a venture capital fund, and a small stocks market. The network of National Incubation Centers (NICs) will be strengthened to support startups with plans to expand into second-tier cities and create sector-specific NICs.
Venture Capital and Startup Regulations: Reforming venture capital and startup regulations to encourage local investment in startups. This includes making regulations attractive for local investors, enabling institutional investors to invest in high-risk ventures, and liberalizing equity structuring and fundraising rules. A high-level committee will be established to review and improve SECP rules for startups
Digital Disruption: The environment for disruptive innovation, particularly digital disruption, across various sectors such as government, transportation, logistics, agriculture, finance, hospitality, professional services, and e-commerce will be actively fostered. Policy measures should support digitization and disruption to create efficiencies and wealth, with an estimated 250,000 jobs created annually through mobile technology and fintech alone. Enabling disruption rather than blocking, it will maximize its benefits. Leveraging CPEC’s potential as an catalyst for entrepreneurial and startups growth, particularly in the IT hardware and products sector. Is essetinal. China presents a tremendous opportunity for Pakistani startups, especially in hardware, mobile, eCommerce, payments, and 41R space – to capitalize on a formidable growth engine and the world’s largest market next door. 

Telecommunications

Pakistan’s telecom sector will continue to advance ahead as a key enabler of economic growth through further implementation of the liberalization regime already in place. (Mo IT &T , 2023) (PTA, 2018-2023)
Continued policy of de-regulation and innovation in the Telecom Sector will enable Pakistan to leverage past investments and capitalize on future growth potential.. Important policy and regulatory steps included in the 2015 Telecom Policy reviewed in 2020, National Cyber Security Policy 2021, Auction of NGMS, Spectrum Policy 2021 and Pakistan’s Cloud First Policy, 2022 etc have already been taken . Some of the other promising initiatives are as follows:

• Competition Rules for the Telecommunication Sector
•  Regulatory Framework for VolP/OTTs
• Regulations for Public WIFI (transmit power and hop length)
• Infrastructure Sharing (Guidelines/regulations for Active-passive sharing, etc.)
• Spectrum Trading and Sharing Framework
• Regulatory Framework for Content Management
• Convergence of IT, Telecom and Electronic Media Sectors/Regulatory Bodies
• Interoperability and transparency.
• Resource optimization and Environmental considerations.
• Institutional structure for cyber threats’ prevention and recovery actions
• Global cooperation 

The launching of the 5G services in Pakistan, growth in NGMS subscribers and transformation of MNOs from voice to data providers will continue to present both challenges and opportunities in the telecom sector. Proactive but supportive regulation and foresight will enable the sector to navigate these challenges.
Piloting and launching of the 5G Services will fuel continued growth in telecom investment and revenues. While the opportunities and possibilities created through the 3G/4G auctions are capitalized upon, we must remain at the cutting edge of the digital disruption by continuing to invest in its foundation and right set of policies. The launch of 5G services will further fuel the digitization of the economy and the society. The 13th FYP envision continued commitment of the government on this front starting from piloting and testing ultimately to launching of 5G services in the country.

Targets for e-governance and citizen services focus on ICT adoption, digitization, and quantifiable performance improvement within the government and its interface with citizens. Specific targets include:
Setting up an International Payment Gateway to support digital, fintech, and eCommerce innovation is a priority for the 13th FYP. This can be achieved through public sector provision by the State Bank of Pakistan, a public-private partnership (similar to 1-Link), or attracting a foreign provider (such as PayPal). This will address key bottlenecks in the freelancing and export sectors.

Targets

e-Governance and Citizen Services

E-Governance and Citizen Services focus on ICT adoption, digitization, and quantifiable performance improvement within the government and its interface with the citizens (Mo IT &T , 2023) The specific targets being set include:
Automation and digitization of at least 75 per cent of the government’s functions and citizen interface to lead to quantifiable improvements in efficiency and performance on a year-on-year basis. 

• Meaningful financial inclusion for at least 50 million people by 2023 including, transferring all government-linked transactions and cash-transfers through igital means
• Indigenization of digital content and user interfaces to Urdu and other major regional languages for online citizen services by the government.
• A Strong government data backbone available decision making, data-driven innovation, and private sector to APl development to reach and serve a large population (225m+)
• Recent advances in Artificial Intelligence (Al) present a a challenge for more labor-intensive manufacturing activities in developing countries to survive in the long-term. Emphasis on AI in higher Higher Education Institutions (HEIs) and research institutes, as well as its application in various areas such as sports, textile, and such as smarter manufacturing facilities etc, is necessary to meet this challenge
• Fintech can help alleviate poverty through financial inclusion of population living in remote areas. Various initiatives to boost electronic transactions of money in the country will be provided with a conducive environment through policy interventions, legal amendments t and improvement in digital infrastructure.IT Exports and Freelancing: The 13th FYP envisions IT as a major driver of export growth in Pakistan, making an all-out effort to use it as an instrument of direct wealth creation for the economy. To increase the potential of e-commerce within the country, PayPal or a similar international payment gateway will be provided. The Plan will create a conducive environment for thriving e-commerce.
• ICT and high technology exports: Increasing ICT export to USD 10 – 15 billion by 2029 (currently at $3 billion including both reported through SBP and unreported revenues)
• ICT Certifications: 150 CMMI certified companies i.e. 80 at level 2, 50 at level 3 and 20 at level 5 ISO 27000, 200 for ISO 27001, 100 each for Quality Management System ISO 9001, Business Continuity ISO 22301, Risk Management ISO 31000 along with key individual certifications such as PMP, SAP, Six Sigma, Green Belt etc.
• Freelancing: Freelancing revenue to increase to USD 5 billion annually by 2029 (currently est. at 1 billion/yr.)
• HR capacity: Increase in number of CS and IT university graduates from 50K to 200K annually (from the current levels of 35000 if the export growth targets have to be materialized.
• Quality manpower: 50,000 high quality certified “exportable” 4IR graduates by 2029 holding or bringing in high-end globally sought-after jobs and positions.
• Regulatory front: SBP has increased the permissible retention limit of IT exporters from 35% to 50% of their export proceeds in the Exporters’ Specialized Foreign Currency Accounts(ESFCAs).
•  Freelancers Framework: The freelancers will now be able to open the bank accounts both digitally and physically at their choice with minimum documentation requirements. Further, their ESFCAs shall be opened concurrently with the opening of their primary PKR account. The freelancers can retain 50% of their export proceeds or USD 5,000/- per month, whichever is higher, in their ESFCAs and can make all payments from these accounts without any approval from SBP or banks. (SBP, 2023)
• Startups and Entrepreneurship Ecosystem: The 13th FYP envisions that the startups and entrepreneurship eco-system will continue to strengthen and grow during the Plan period and this growth will be primarily driven by the private enterprise and initiative but supported and facilitated through an enabling environment. Investments in Pakistani startups have shown immense growth in recent years. Pakistan has become one of the hottest entrepreneurial markets in the world, a trend which started in 2020 with a total ofUSD 75 million investment being injected in 50 startups, up 57.3 percent from 2019. These deals included large ticket sizes such as Bykea with USD 13 million, Airlift with USD 10 million, Finja with USD 9 million, Medznmore with USD 2.6 million, Retailo with USD 2.3 million, Tajir with USD 1.8 million and Bazaar with USD 1.3 million. The trend further grew in 2021, with investments raised by Pakistani startups reaching USD 373 million, five times more than the figures in 2020. Despite difficult global economic conditions, Pakistani startups were able to raise USD 363 million in 2022. (SECP, 2023). The specific targets in next five years are: 

Venture Funding: Annual venture funding levels of at least USD 500 million
Entrepreneurship: At least 1,000 startups supported through the National Incubation Centre’s plus at least 3-5 times more created and supported within the broader startup eco-system that survive beyond 2 years of their creation.
Startup success: At least one Pakistani “unicorn” (i.e., company with USD 1 billion market valuation) and 5-10 USD 100 million companies (currently 1 or 2).
Information Technology Exports: This plan is envisioned on making Pakistan a Global I.T. Hub and to increase IT exportsto USD 10 – 15 billion in the next 05 years. The set target is fully dependent upon the availability of a qualified and fully skilled IT workforce and the necessary infrastructure. As of now, around 600,000 IT professionals are working in the IT industry with an annual export of ~ USD 3.0 billion.
Training of selected nationals of Pakistan (IT and Non-IT) on specific platforms for employment in the IT industry.
Industry Tutors Specialized Training (Train the Trainers): Master trainers will be produced in the field of Artificial Intelligence, Blockchain, ERP & CRM, Cloud computing, Cybersecurity, Digital twin, E-learning, E-agriculture, and AR, VR & MR. These trainers will be selected through nomination from IT companies under selection criteria.

Cyber Security:

The plan envisions tackling a critical issue on securing the systems and networks and preventing data leakages, pilferages etc. Increased investments on securing digital networks through enhanced layers of encrypted security features would add value to networking capabilities and would enhance level of trust which can then be adopted by corporate, retail, industrial and other systems of the country. (Mo IT &T , 2023) (NR3C, 2023) (PTA, 2018-2023) The planned investment by the US on cybersecurity would project reach USD 459 billion by 2025 with cumulative spending of USD 1.7 trillion. For Pakistan, the plan envisages:

Designing of a Cyber security framework at national and provincial tiers
Working with Internet Service Providers (ISPs) and Telecom operators to block malware attacks, by restricting access to specific domains or websites that are known sources of malware (known as Domain Name System (DNS) blocking / filtering, etc.). Active defense strategies will be formulated with the engagement of respective stakeholders.
Preventing email phishing and spoofing activity on public networks.
Promoting best security practice through Internet governance organizations; such as Internet Corporation for Assigned Names and Numbers (ICANN), Asia Pacific Network Information Center (APNIC), the Internet Engineering Task Force (IETF), European Regional Internet Registry (RIPE), and UN Internet Governance Forum (IGF), etc. Work with international law enforcement channels to protect Pakistan citizens from cyber-attacks from unprotected infrastructure overseas.

Artificial Intelligence Framework

The Al policy aims to augment Al and allied technologies through balanced demand and supply-side interventions, as mentioned below.

• Market Enablement – Establishment of research & innovation centers in Al for developing, test-bedding, deploying, and scaling Al solutions. This includes learning how to improve governance and manage the impact of Al.
• Progressive and Trusted Environment – Responsible use of Al to generate economic gains and improve lives. In addition, Al will raise the Government’s capability to deliver anticipatory and personalized services.
• Enabling Al through Awareness and Readiness – Pakistan shall increase awareness and understanding of Al technologies and their benefits; our workforce will be equipped with the necessary competencies to participate in the Al economy.
• Transformation & Evolution – Transformation of sectors and industries towards effective use of Al, facilitated by national IT boards through creating awareness and offering training programs through sectoral cooperation.

Telecommunications

The 13th FYP builds upon the successes of the previous FYP period to continue the growth and upgradation of the telecom infrastructure and its related services. The onset of the 4th Industrial Revolution and its associated trends – blockchain, big data, cloud computing, and internet of things will require continued investment in high-speed mobile broadband. Pakistan will begin to carry out experimentation with 5G networks and their data intensive applications and hope to launch the service by the end of the Plan period. Specific targets for the telecommunications sector include:
Continued growth and upgradation of telecom infrastructure and sector will lead to at least 10 per cent year on year growth in Telecom industry revenues and tax collections to match the planned growth targets for services sector.
Launching of 5G services during the Plan period and transitions and transformations at the intersection of voice/data shall continue to fuel telecom growth with at least 100 million next generation mobile services (NGMS) subscribers including 10 per cent 5G users

Merger of connectivity, data, and devices shall enable the network to become ready for the 4th Industrial Revolution.

PTA is dedicated to foster an environment that ensures top-notch telecom services and infrastructure accessibility throughout Pakistan, aiming to bridge the digital gap. In the upcoming year, PTA’s primary focus will revolve around Quality of Service (QoS) and coverage enhancements. Among its key priorities are fostering industry profitability, ensuring digital inclusion while prioritizing security, promoting infrastructure and spectrum sharing, and advancing the standardization and local production of telecom equipment.

Policy Interventions/Programs and Initiatives

To launch and implement initiatives and programs mentioned in proceeding paras, an investment of Rs.117.5 billion is needed in IT sector for the entire Plan period.This investment will come from federal and provincial government contribution, as well as through public-private partnership basis. (Mo PD & SI, 2023). The current investment and projected schemes for completion during the plan period are summarized as follows:

Digital Infrastructure and Technology Enhancement Projects

• PM’s Initiative Support for IT Startups, Specialized IT Trainings and Venture Capital
• Cyber Security for Digital Pakistan (Phase-I)
• Expansion of FTTH Services (GPON) in 1 lx Existing Cities of AJ&K and GB (PhaseIV)
• Digital Economy Enhancement Project (DEEP)
• Deployment of optical Fiber Cable for Expansion of Transmission Network in GB
• Development of ICT and Al based Prevision Agriculture System utilizing Dual Use Aerospace Technologies – Green AI

Advanced Mapping and Satellite Imaging Projects

• Cadastral Mapping
• Punjab Urban Land System Enhancement Project (PULSE)
• Accelerated Geological Mapping and Mineral Expansion Using Advanced Satellite Image Based Technologies for Unmapped Areas 
• Construction of Planetarium at Islamabad
• Establishment of Spaceport

Institutional Capacity Building and Advancement Programs

• Gwadar Safe City (Phase – I)
• Operational Improvement of Federal Investigation Agency in AML/CFT,
• Counter Terrorism Wing & Case Management System
• Punjab Police Integrated Command, Control and Communication (PPIC3)
• Centre Rawalpindi
• Establishment of Knowledge Park in Pakistan Phase-I
• Establishment of IT CentersIn Ten Districts of Gilgit-Baltistan
• Pakistan Cyber Efficient Parliament
• Strengthening and Expansion of National Judicial Automation Unit (NJAU)
• Expansion of IT Systems of the Office of Federal Tax Ombudsman including Computerization of 5 newly established FTO Regional Offices
• Established of JCT enabled libraries at Federal Judicial Complexes at Islamabad and Peshawar
• Archiving and Digitalization of Legislation and Record of Ministry of Law and Justice
• Automation of Federal Courts/Tribunals Phase – (Revised)
• Establishment of Technology Park Islamabad (Phase -II) and Technology Park Karachi
• Technology Export Marketing Program
• Strengthening of Infrastructure and academic programs of Government College Women University Sialkot (GCWUS)

4.1 Strategic Population Management

Pakistan faces one of the highest population growth rates globally, creating significant challenges for sustainable development. The relentless population strains limited resources, exacerbating socioeconomic disparities and hindering progress across various sectors. The 2023 digital census reports Pakistan’s population at 242.49 million, making it the world’s fifth most populous nation, with an intercensal growth rate of 2.55%. Modern contraceptive usage remains suboptimal, contributing to approximately 2.5 million induced abortions annually. These abortions pose serious risks to maternal health and highlight the substantial unmet need for family planning services. The following table shows population growth trends since 1951.

Table 1. Average Annual Population Growth Rate of Pakistan 1951-2023 

Despite strategic advancements, Pakistan continues to face significant challenges in population management and sustainable development, necessitating increased investment and comprehensive policies. Key areas of focus should include improving access to reproductive health services and family planning is crucial, as well as promoting sustainable development practices and renewable energy. 

In 1994, Pakistan, along with 178 other countries, adopted the International Conference on Population and Development (ICPD) Program of Action. This program recognizes the interdependence between population, development, and individual well-being as essential to promoting sustainable development. 

Reducing poverty through employment generation, creating an enabling environment for entrepreneurship, and supporting small and medium-sized enterprises are crucial to addressing population growth rates. In the health sector, which is strongly associated with population growth, efforts should be directed toward reducing disparities in maternal health outcomes, ensuring equitable access to quality services, and investing in primary healthcare services. Issues in Population and Family Planning:  

• High Fertility Rates: Pakistan continues to experience high fertility rates, contributing to rapid population growth. Factors such as limited access to family planning services, low priority/ investment in government, cultural norms, and socioeconomic disparities contribute to this issue.  
• Unmet Need for Contraceptives: Despite efforts to increase access to contraceptives, a significant portion of the population still faces challenges in accessing family planning services and contraceptives. This unmet need contributes to unintended pregnancies and strains on resources.  
• Limited Awareness and Education: Low levels of awareness and education about family planning and reproductive health contribute to misconceptions and barriers to contraceptive use. Cultural and religious beliefs may also influence attitudes toward family planning methods.  
• Inadequate Healthcare Infrastructure: Insufficient healthcare infrastructure, particularly in rural areas, hinders access to quality family planning services. The limited availability of trained healthcare providers and insufficient supply chain management further impede the delivery of contraceptives.  
• Socioeconomic Disparities: Socioeconomic disparities, including poverty and gender inequality, significantly shape population dynamics. Women from marginalized communities often have limited autonomy in making decisions regarding family planning, exacerbating the issue of unmet need for contraceptives.  
• Policy Implementation Challenges: While Pakistan has formulated policies and strategies to address population and family planning issues, effective implementation remains challenging. Limited resources, bureaucratic hurdles, and political factors may hinder the execution of comprehensive population management programs. 

Review of 12th Five-Year Plan (2018-2023) 

The 12th Five Year Plan presented a comprehensive strategy to tackle high population growth and promote reproductive health. The plan’s multi-faceted approach included increasing contraceptive prevalence, advocating for behavioral change, and reforming high-risk fertility behaviors. Key initiatives included the establishment of a National Task Force, increased funding, and legislative measures like the Child Marriage Restraint Bill, aiming for holistic solutions from policy to grassroots levels. 

The plan set ambitious targets for demographic indicators such as contraceptive prevalence rate, unmet need for contraceptives, and total fertility rate. Progress has been made, with increases in contraceptive prevalence and decreases in total fertility rate, though challenges persist in fully addressing unmet contraceptive needs and achieving desired population growth rates. The addition of service delivery units and investments in human resource development have significantly improved access to family planning services.

Table 2. Important Demographic Variables

However, achieving the desired objectives of the plan requires sustained efforts, continued investment, and effective implementation of strategies at all levels of governance. Monitoring and evaluation mechanisms should be strengthened to track progress, identify gaps, and adapt strategies as needed to ensure the plan’s success in the long run. 

Approach to the 13th Five-Year Plan 

Objectives of the plan 

In the aftermath of 18th Constitutional Amendment, Population planning has been devolved to the provinces and the federal government is only responsible for macroeconomic stability and growth as per its mandate.  

• Provinces will: 
  • Develop political ownership and robust governance mechanisms to control population growth rate. 
  • Stabilizing the population is an essential requirement for promoting sustainable development. 
  • Achieve universal access to safe reproductive health, including family planning services, by 2029 
  • To ensure effective program implementation at the District, Tehsil, UC, and village levels. 
  • Strengthen partnership and involvement of development partners and the private sector.
  • Enabling systems through legislation, awareness, implementation accountability, and sustained impact through a Multi-Sectoral Approach for FPRH. 
  • The lack of a consolidated population policy at the national level could encompass the working of provincial population departments and harmonize the efforts for effective population control.

Strategies and ways forward 

Postpartum Family Planning 

The postpartum phase begins immediately after childbirth and lasts for approximately six weeks, during which a woman’s body gradually returns to its pre-pregnancy state. Family planning during this time addresses immediate needs and extends throughout the first year following delivery. This year-long period can be divided into several segments:  

Post-placental: occurring within 10 minutes after the delivery of the placenta.  

Immediate postpartum: covering the first week after delivery.  

Post-partum: spanning from one week to six weeks after delivery.  

Extended postpartum: lasting from six weeks to one year after delivery. 

The strategy aims to provide clear guidance for implementing post-pregnancy family planning (PPFP interventions.). It outlines several specific objectives to ensure effective implementation which are as under: 

1. Strengthening and developing a skilled cadre of master-trainers and trainers 
2. Ensure provision of comprehensive counseling and services to mothers delivering at healthcare facilities 

iii. Extend PPFP counseling and services to mothers at home, establishing effective referral and linkage mechanisms. 

Universal Access to Family Planning: Achieving Pakistan’s sustainable development goals by 2030 heavily depends on attaining Universal Health Coverage (UHC). However, significant institutional and socioeconomic barriers impede progress. To achieve UHC, Pakistan must enhance its health system by expanding population coverage, broadening the range of services, and reducing patient costs. Key prerequisites include increasing healthcare budget allocation as a percentage of GDP, enhancing the public health sector’s human resources and service availability, and establishing durable safety nets regardless of political changes. Additionally, reducing reliance on external donor funding and ensuring accountability among healthcare providers, managers, administrators, and policymakers are essential for sustainable progress. Advocacy for Family Planning: Advocating for family planning is essential for raising awareness and acceptance within communities. Involving influential figures such as religious scholars, intellectuals, writers, columnists, and opinion makers is crucial. These individuals can shape public opinion and support family planning initiatives. Engaging them through TV talk shows, FM radio programs, family health fairs , seminars, and workshops can help reach a wider audience, stimulate meaningful discussions, and dispel misconceptions or stigmas. This approach educates the public and fosters a supportive environment for family planning, contributing to improved health outcomes and overall well-being. 

Introduction of Premarital Counseling content for adolescents: Pre-marital counseling for adolescents can significantly improve reproductive health by providing accurate information and timely services. Programs like Aghaaz can establish community-based counseling centers staffed with trained counselors, psychologists, and social workers to offer confidential sessions. These sessions can cover topics such as marriage concepts, communication skills, conflict resolution, decision-making, and the importance of mutual respect and consent in relationships.

Expansion of service delivery network, including Men Advisory Centers: The objective is to establish new purpose-built structures for Family Health Clinics and Men Advisory Centers to improve the quality of services provided, to ensure the privacy of clients coming for counseling on adolescent health problems, and to attract the community by providing a more professional look and environment. 

Accessible Service Delivery Methods: Implementing accessible and comprehensive family planning services nationwide is crucial. This involves establishing family planning clinics or centers in urban and rural areas, ensuring that individuals have easy access to contraceptives. Community Outreach and Education: Community outreach and education programs are essential for raising awareness about family planning and reproductive health. Men’s advisory centers can organize workshops, seminars, and information sessions with community leaders, religious institutions, and local NGOs. 

Integration of Men’s Health Services: Men’s advisory centers can serve as hubs for providing comprehensive men’s health services, including family planning counseling and services. By integrating family planning into existing men’s health programs, these centers can normalize discussions about contraception and encourage men to take an active role in family planning decisions. 

Cultural Sensitivity and Tailored Approaches: Recognizing the cultural and religious sensitivities surrounding family planning is essential for effective outreach and service delivery. Men’s advisory centers can adopt culturally sensitive approaches, such as engaging religious leaders and influencers to promote family planning messages within their communities.

Policy Advocacy and Collaboration: Men advisory centers can advocate for supportive policies and collaborate with government agencies, NGOs, and other stakeholders to improve family planning services and access. 

Strengthening Public-Private Partnership 

Private-public partnerships (PPPs) offer a promising opportunity to enhance family planning efforts in Pakistan. By leveraging strengths of both the private and public sectors, these

partnerships can effectively tackle the multi-faceted challenges related to family planning and population control. 

Reconfiguring Lady Health Workers Program 

The reconfiguration of the Lady Health Worker (LHW) program can significantly enhance population control efforts in Pakistan by focusing on key areas: such as intensifying impact in covered communities, expansion into underserved areas, improving services quality, boosting workforce capacity, and fostering innovative partnerships. By prioritizing these aspects, Pakistan can strengthen its population control initiatives and accelerate progress toward achieving demographic and health-related goals. 

Ingraining religious leaders in promoting family planning i.e involvement of faith leaders (Imams & Khateebs) can effectively enhance the use of contraceptives and decrease infant and maternal mortality. 

Targets of 13th Plan 

Physical Targets 

The physical targets for the 13th Five Year Plan are divided into two categories: improvement of demographic indicators and expansion of service delivery outlets and service providers. The demographic targets are challenging and achievement can be made if strategies envisaged in the Plan are aggressively executed and implemented in an effective manner.

Table 3. Target Demographic Indicators

*Estimates from United Nations Population Funds using Family Planning Estimation Tool
** The Total Fertility Rate (TFR) is estimated based on Bongrath’s Determinants of Fertility Model

Table 4. Projected Population

Table 5. Targets of Service Delivery Units

Investment /Financial Plan 

Population and family planning is a devolved subject and responsibility of provincial governments, therefore, moral support and advisory assistance will be provided by the federal government to this national cause. 

Table 6. Estimated Outlay on Population, FP&RH

The 13th Plan would focus on devising and implementing a comprehensive national action plan/strategy to control high fertility rate by involving all the public and private sector stakeholders. The consensus and coordination between the federation and provinces to resolve the population and family planning issues will be improved to activate their roles within the limits of devolution. The Plan envisages political will to control rampant population, free provision of contraceptives to the couples, integration of health department service delivery outlets for provision of family planning services and an aggressive advocacy and awareness campaign for promoting family planning and small family norms. 

To recognize population as a cross sectoral subject, we need to integrate the population management across the 13 thematic areas including Poverty Eradication and employment, health, education, climate change, sexual and reproductive health rights, gender equality and women empowerment, adolescence and young people, population and sustainable development, digitalization, urbanization, migration, aging, inclusion and diversity, youth and development and data and statistics which are in line with the 5Es framework of Planning Commission to turn around Pakistan. 

4.2 Educational Excellence: Fostering Basic and College Learning

Pakistan’s net primary as well as secondary enrollment is the lowest in the region. Similarly, Pakistan is the lowest in gender parity in education, literacy rate and unfortunately the highest out of school children. 

Establishing a robust socio-economic structure in Pakistan depends heavily on the 100 percent access and quality education, essential for progress and prosperity. The Plan provides a strategic roadmap to enhance educational quality and accessibility. It aims to develop individuals and build a knowledge-driven society capable of meeting global challenges with resilience and ingenuity. The Plan also aims to nurture critical thinking, creativity, practical skills, and prepare youth to be responsible global citizens through collaboration, sustained resource commitment, and outlines financial requirements reflecting the seriousness of the task. 

Table 1: Comparing Pakistan’s Education Landscape with South Asian Counterparts

Sustainable Energy for Modern Needs

Introduction

Provision of reliable, affordable, and accessible energy supply holds immense significance in the economic development of the country and its prospects for growth. Pakistan’s energy sector in 2022-23 is heavily reliant on fossil fuels, with oil and gas together accounting for over half of the primary energy supply. Coal contributes another 15%, while LNG imports provide 10%. Nuclear and hydroelectricity combined make up 18% and imported electricity having
limited share in the overall energy supply. Almost half of the primary energy
supplies are import based, thus, rendering the country vulnerable to external
shocks and disruptions in international supply chain.

In terms of final energy consumption, transport sector has the leading share at 33% followed by industrial sector at 31% and domestic sector at 26%. Commercial and agriculture sectors have meager share at 4% and 2% each reflecting the dynamics of energy usage in the economy (Hydrocarbon Development Institute of Pakistan, 2024).

Pakistan’s overall energy needs are being met through fossil fuels-based
supplies. These trends highlight the need for Pakistan to diversify its energy
mix and reduce its dependence on fossil fuels. During the plan period 2024-29, Pakistan will embark upon a transformative journey of sustainable development, for which energy security will remain basis. While the transition towards cleaner sources like nuclear and hydro is underway, further efforts are required to accelerate electrification and promote renewable energy sources. 

The final energy consumption in Pakistan for 2022-23 reveals a continued reliance on fossil fuels, with oil and gas dominating the landscape at 66%. This dependence underscores the need for Pakistan to prioritize the diversification of its energy mix and move towards cleaner sources. While electricity consumption is steadily increasing, it remains overshadowed by fossil fuels. Accelerating electrification and promoting renewable energy sources are crucial steps towards achieving a more sustainable energy future for Pakistan.

Looking ahead to 2028-29, Pakistan’s energy landscape seems to be undergoing a delicate transition. While fossil fuels like oil, coal and gas retain significant majority of the primary energy supply pie (24%, 21% and 16% respectively), their dominance is declining compared to 2022-23. In a positive shift, cleaner sources are gaining ground, coal consumption is projected to increase to 21%, but renewable energy leaps forward to a commendable 7%. Hydropower maintains a steady 12%, showcasing its continued importance. Interestingly, LNG imports are predicted to steadily grow to 14%, suggesting a focus on utilizing existing infrastructure while exploring cleaner alternatives (Energy Planning and Resource Centre, 2023).

The final energy consumption trend shows a slight change with largest chunk, 32% going to industries, highlighting their crucial role in the economy. However, transportation share decreases from 33% to 30%, showcasing a promising move away from fossil fuel dependence in this sector. Domestic consumption (21%) and the commercial sector (3%) show moderate changes, while agriculture’s share remains small but stable. Notably, “non energy” uses, mainly for lubricants and feedstocks, claim a significant 8% of the pie, emphasizing the diversified needs of the energy sector (Energy Planning and Resource Centre, 2023).

In conclusion, Pakistan’s energy future in 2028-29 paints a cautiously optimistic picture. While fossil fuels still hold sway, the increasing reliance on renewable energy and the electrification of transportation are encouraging signs. Balancing
the needs of diverse sectors with a growing commitment to cleaner sources will be key to ensuring a sustainable energy future for the nation.

Challenges in the energy sector, however, remain. High-capacity payments, transmission system constraints and bottlenecks, high AT&C losses coupled with ageing infrastructure would be the challenges to cope in next five to ten years. On petroleum side, increasing imports especially refined products coupled with increasing import bills, stagnate refinery production and lesser capacity utilization due to reduced requirements of RFO requires a holistic review of oil demand and supply. Similarly, domestic natural gas supply continues to
fall sharply. RLNG supplies have bridged the supply gap but the RLNG price mismatch vis-à-vis domestic gas is fast becoming unsustainable and resulting in accumulation of gas sector circular debt. Lastly, energy is mispriced and there is an ongoing battle to raise revenue through increase in gas and electricity bills.

Current GoP investment obligation in energy sector, in the form of PSDP portfolio and sovereign guarantee based foreign aided projects, stands around Rs. 5 trillion (Planning Commission, 2023). With shrinking fiscal space and the intent of GoP to transition towards a market-oriented energy sector, an inherent emphasis in this 5-year plan is to shift the orientation of energy sector from public sector to private sector to bring financial and operational efficiency. A healthy energy sector requires sound institutions and an adequate financial balance to enable it to stand on its own feet. Domestic resources such as coal could help in fixing Pakistan’s energy challenges, however, recent international development might hinder the exploitation of these domestic coal sources. Without elusive foreign investment, the development will remain slow. Overcoming these challenges will be a boon for the economic prosperity of the country.

Review of the 12th Five-Year Plan

The country’s performance in energy sector has remained satisfactory despite the fact that external shocks in the wake of COVID19 and Russia-Ukraine has negatively affected the global energy market dynamics. There has been a consensus within energy sector to move towards indigenized supply and better financial management while reducing leakages especially in power and gas sector. Affordability for domestic consumers and competitive tariffs for industries remains one of the key concerns during the 12th five-year plan period.

Power Sector

A gist of the key achievements during the last five years has been summarized as under:
Table 8 Power Sector Key Statistics 2018-2023

Policy Framework

National Electricity Policy (NEP) was approved in 2021. It laid down actions and plans for the power sector based on six principles namely efficiency, transparency, competition, financial viability, indigenization, research & development and environmental responsibility. To effectuate the policy into action, a National Electricity Plan approved in 2023, provides guidelines, implementation mechanisms and tools for the realization of the policy goals for the power sector, envisaged in NEP, 2021 (Power Division, National Electricity Plan 2023-27, 2023).

Competitive trading bilateral contracts market (CTBCM) under the National Electricity Policy of 2021 and National Electricity Plan of 2023-28 stresses on the development of efficient and liquid power market design. Initially it envisages competitive trading of electricity at wholesale level, which will be followed by gradual liberalization of the retail market. A trial run of the CTBCM has been completed which has recommended amendments in the commercial code. 

A Circular Debt Management Plan (CDMP) is in place with joint efforts of GoP and IMF that comprised action items pertaining to optimization of electricity cost, tariff determinations, timely release of subsidies, retiring debt of Power Holding Company (PHL) and DISCO losses and recoveries. Circular debt continues to be a threat to the power sector viability, which stood at Rs. 2,310 billion at end of June 2023 (Power Division, Circular Debt Report – Jun 2023, 2023).

Alternative and Renewable Energy (ARE) Policy, 2019 was approved by the Government of Pakistan, that aimed to create a conducive environment for the sustainable growth of the Alternative and Renewable Energy (ARE) sector in Pakistan. The policy envisions having 20% of the generation capacity from ARE technologies by 2025 and 30% by 2030 (Power Division, Alternative & Renewable Energy Policy, 2019). The policy was expected to help Pakistan reduce its dependence on fossil fuels and promote the use of renewable energy sources. However, the said policy has not been able to nudge implementation or results thereof in the absence of any implementation plan. Recent auction of 600MW solar parks has seen less demand within private sector.

Indicative Generation Capacity Expansion plan (IGCEP) is a comprehensive and forward looking electricity expansion planning document. Its iteration is being developed every year through rigorous data modeling and optimization exercises, taking into account existing policy framework, contractual obligations, natural resource allocations, and relevant provisions of the prevailing Grid Code.

Transmission System Expansion Plan (TSEP) shall be formed on the basis of IGCEP. TSEP will outline the necessary investments and infrastructure developments to support the country’s electricity demand growth and the integration of renewable energy sources. This plan will prioritize projects that enhance the reliability and resiliency of the grid, ensuring that Pakistan’s electricity infrastructure remains robust and efficient.

Distribution Integrated Investment Plan (DIIP) is an integrated plan of all distribution companies strengthening the distribution infrastructure to enhance grid resilience and reliability. By investing in distribution infrastructure, the plan aims to ensure that the electricity grid can withstand extreme weather, meet expanding electricity needs, and support the integration of clean energy generation.

Public Investment

During the 2023-24, GoP has allocated Rs. 194 Billion for various power sector infrastructure projects (including foreign and PSDP-financed). Rs. 82 billion were allocated for 21 hydel projects whereas Rs. 68.7 billion were allocated for 61 transmission projects and Rs 15 billion for 39 distribution sector projects in PSDP 2023-24 (Planning Commission, 2023).

Private Sector Investments

Power Generation: The power sector in Pakistan has witnessed significant private sector participation in the generation value chain constituting 60% in terms of installed capacity, primarily through Independent Power Producers (IPPs). Adhering to the Least Cost Generation principle outlined in the Integrated Generation Capacity Expansion Plan (IGCEP), the Government of Pakistan (GoP) plans to continue contracting additional capacity through competitive bidding over the next five years. Notably, the Sindh Engro Coal Mining project in Thar exemplifies private sector involvement in the generation value chain. This strategic collaboration underscores the government’s commitment to fostering an environment conducive to private investment in power generation.

Transmission Value Chain: While private sector involvement in the transmission value chain has been limited and currently only “Matiari to Lahore ±660 KV HVDC Transmission Line Project” being the private sector project. Even a comprehensive “Policy Framework for Private Sector Transmission Line Projects, 2015” with substantial fiscal and financial incentives could not allure the private sector to invest in the sector. Currently, NTDC is the only major player in the transmission sector and it cannot sustain to grow indefinitely that too without any competition. It is imperative that private sector may be involved in future transmission system expansion either in the form of PPP or wholly owned private sector projects on BOO, BOOT etc. The transmission projects are generally not financially viable on standalone basis; therefore, it is important that to make the projects financially attractive, the government may inject equity, partnership or investment in shape of viability gap fund (VGF).

Distribution Value Chain: In the distribution value chain, private sector participation has been evidently absent thus far. The current plan period coincides with the dates of CTBCM which aims to shift power market from a single buyer model to competitive trade of electricity at wholesale level. The private sector would invariably be part of the auctions and trading of the electricity. Furthermore, the next plan period is envisioned to cascade this affect to retail levels, contributing to a more dynamic and competitive power distribution landscape. Moreover, to reduce the GoP footprint form the sector and enhance the participation of private sector, there are different models under consideration to enhance the share of the private sector in the power distribution sector. The government is pursuing the options of privatization, leasing the DISCOs or long term concessional agreements which is expected to enhance the efficiency of the sector in the shape of AT&C reductions, reliability of the energy supplies and ultimately enhancing the affordability of the electricity to the end consumer.

Issues/Challenges

Generation:

• Two thirds of the generation mix of the country is thermal and a large part of generation capability is dependent on imported fuels which not only results in higher
  cost of generating electricity but also higher import bill. Furthermore, despite a sharp decline in prices, penetration rate of ARE resources is slow as the share of RE in
  generation mix stands at 4.2%;
• Owing to exogenous shocks in terms of economic slowdown, currency depreciation coupled with adverse effects of international fuel prices, the demand for electricity
  has remained lower which is further exacerbating the capacity payment issue. Country needs higher consumption of electricity which will reduce per unit capacity payments;
• Current tariff determination methodology needs to be reviewed as it provides basis for dollarization of tariffs not only at initial stage but it cascades down to the value
  chain of electricity up to the end consumer raising inflation. Furthermore, the indexation is without any cap or limit. Additionally, take or pay provision is damaging
  the solvency of the power sector and, therefore, needs further scrutiny;
•  GoP footprint in the generation chain is crowding out any potential private investments. Furthermore, delay in approval of licensing and tariff determination by
  regulator adds up costs to the circular debt;
•  Gas allocation within power sector is not based on efficiency of plant/value addition to economy (Energy Planning & Resource Centre, 2023);

Transmission:

• Non-synchronization of Transmission system expansion plan (TSEP) with Integrated Generation Capacity Expansion Plan (IGCEP) and Distribution infrastructure
  investment plan (DIIP), which needs to be accounted for to safeguard investments in the value chain of electricity;
•  Technical issues of congestion and bottlenecks results in non-conformity to the economic merit order that results in dispatch from expensive power plants having
  adverse impact on consumer tariffs (e.g 1242 deviations from merit order in 2022-23) (NPCC, 2023). Furthermore, recent blackouts/brownouts show inadequate infrastructure resilience w.r.t system stresses with and without climate change;
•  Operational sustainability issues remain in the transmission system with lack of reactive power compensation mechanism and absence of real-time system operations. Furthermore, right of way (ROW) and land acquisition issues result in inordinate delays in execution of the projects resulting in cost and time overrun;
•  Throw-forward of NTDC has increased beyond sustainability with major investments via PSDP and foreign loans thus exhibiting negligible private sector investments.

Distribution:

• Excessive GoP footprint in the distribution chain is crowding out any potential private investments. Similarly, operational autonomy of DISCOs remains an elusive concept. Whereas autonomy is a pre-requisite for operations, performance and accountability of DISCOs. Furthermore, there is no viable business model of DISCOs whereby numerous options are under consideration including but not limited to privatization, provincialization, long-term concession agreements, recovery outsourcing etc.
•  Distribution losses are considerably higher than the global average of around 8 percent; actual average distribution losses reported by DISCOs are 17.13 per cent (NEPRA). This leads to forced power outages despite the allocation of power to DISCOs. In addition to losses, low recovery of bills remains a core issue whereby bad debt pertaining to permanent and temporary defaulters of respective DISCOs need to be concluded,
•  Distribution value chain is rife with asymmetric information and negligible transparency of data whereby issues of overbilling and information disclosure remain. Additionally, there is weak institutional readiness of DISCOs for CTBCM implementation.  
•  Current tariff structure discourages productive use at consumer end.

Fuel Sector

A gist of the key achievements during the last five years in the fuel sector has been summarized as under:

• The average indigenous oil production steadily kept shrinking from 89,000 barrels per day during 2017-19 to 69,500 barrels per day in 2022-23, signaling room for improvement.
•  Similarly, the average indigenous gas production steadily kept contracting from nearly 4000 MMCFD in 2017-19 to 3,259 MMCFD in 2022-23, emphasizing the need
  for intensified efforts and focused investments.
•  The gas supply gap, bridged through LNG imports, was expected to reach 1,350 MMCFD whereas it reached its peak of 1084 MMCFD in 2020-21. For 2022-23, 880
  MMCFD were imported for bridging this gap (Hydrocarbon Development Institute of Pakistan, 2024). While effective in the short term, this highlights the importance of
  developing long-term domestic solutions for energy security.
•  The TAPI Gas Pipeline is in progress, showcasing promising ongoing development. Continued efforts and support are essential for its successful completion,
  underscoring its strategic significance.
•  The Iran-Pakistan Gas Pipeline has made no significant progress.
•  Sindh Coal Mining has achieved operational status, supplying Thar coal. However, further efforts are needed to maximize production and utilization, emphasizing the
  importance of strategic initiatives for sustainable energy.
•  Unaccounted-for gas (UFG) losses remain in double digits, indicating insufficient progress in reducing them to the targeted 7-8%. Implementing effective strategies to
  curb UFG losses is critical for financial and operational efficiency.
•  Oil refining capacity, targeted to increase to meet demand, is underutilized due to market changes. Reassessments and adjustments are necessary to align refining
  capacity with market demand for optimal utilization.
•  New refineries, particularly the PARCO Coastal Refinery, show promising progress. However, delays in other projects require attention and solutions to ensure timely
  completion and maximize the benefits of these refineries.

Policy Frameworks

The government of Pakistan has recently introduced two new refining policies aimed at upgrading existing refineries and increasing refining capacity by incentivizing new refinery projects. The two policies are as follows:

Pakistan Oil Refining Policy

Pakistan Oil Refining Policy 2023 For New Greenfield Refineries; under this policy prospective investors are offered financial incentives and tax holidays for up to a period of 20 years. The aim of this policy is to increase the local refining capacity in the Country by setting up new state of the art refineries thereby increasing energy security and saving foreign exchange through import substitution. Whereas for the upgradation of Existing / Brownfield Refineries, the policy offers incentives in order to enable them to upgrade their facilities to minimize furnace oil production and produce Euro V compliant fuels.

Policy Guidelines on Custom Bonded Storage Facilities

Directorate General Oil of Petroleum Division has notified the Policy Guideline on Import on Foreign Supplier’s Account Through Custom Bonded Storage Facilities. As per the guidelines, foreign supplier or its registered subsidiary will be allowed to maintain inventory of crude oil and petroleum products in bulk form, in their own Private Bonded Warehouses or Customs Public Bonded Warehouses located anywhere in Pakistan (without foreign exchange remittances), pending its sale to local purchasers or its re-export therefrom to other foreign countries.

Public Investment

During the previous plan period of 2018-23, public investments in fuel sector remain relatively low and the investments were provided by the designated entities in subsectors
of gas distribution, upstream and midstream of oil sector. Currently, nine projects of fuel sector costing Rs. 10,057.896 million with an allocation of Rs. 1,890.089 million have been included in PSDP 2023-24 (Planning Commission, 2023).

Private Sector Development / Investments

In the fuel and petroleum sector, public sector share has been minimal compared to power sector. The projects in the Upstream Sector by E&P Companies and Downstream Sector by Refineries, OMCs, Gas Utility Companies are undertaken on commercial basis by the private sector without Public Sector Development Programs (PSDP) funding. The focus of PSDP funding for Petroleum sector remains on R&D in the upstream & downstream activities including but not limited to underground gas storage and testing labs with the objective to facilitate private sector investment in the indigenous oil & gas exploration and development.

Notwithstanding, natural gas supply and sale business is dominated by public sector companies. Looking forward, the government anticipates strategic partnerships with the private sector for not only importing LNG and building LNG terminals but also in the distribution of natural gas via creating market-oriented pricing and sales regime. Plans for establishing a new refinery in collaboration with private entities are already underway, supported by recently promulgated policies for new greenfield refineries. This initiative
reflects the government’s commitment to capitalizing on private sector capabilities to drive innovation, efficiency, and sustainable growth in the fuel and petroleum sector during the plan period of 2024-2029.

Issues/ Challenges

Upstream Oil and Gas (O&G)

• Depletion of indigenous oil and gas reserves with lack of proportionate replenishment. No major discovery has been made since Sui. E&P activities has
  remained slow due to poor law and order situation resulting in lack of access to higher prospective areas. Discoveries with small volumes and far from the
  infrastructure are not being developed for economic reasons. Marginal fields Policy is not yielding anticipated results. Private sector E&P companies have wind up their
  business in the country and national companies such as OGDCL and PPL has failed to fill the gap.
•  Pakistan is estimated to have greater than 100 TCF of non-conventional reserves such as Shale and Tight Gas (Petroleum Division, 2020), there is need for policy framework to encourage shale gas exploitation and existing Tight gas policy incentives have not yielded the desired results.
•  Policy and regulatory function of the upstream E&P sector is regulated by Petroleum Division (DGPC). Resultantly capacity constraints are hindering the E&P activities in the country.
•  Current pricing regime under petroleum policy 2012 needs review. Pricing distortions in upstream vis-à-vis downstream sector need to be addressed as ex-depot prices are linked with international benchmarks whereas E&P prices (indigenous gas) are not proportionally linked to the international benchmarks

Midstream O&G

• No refinery has been established since the last two decades. Except PARCO all refineries in Pakistan are on outdated technology producing furnace oil with no
  market to offload. However, there are a multitude of reasons for lack of investment in Pakistan’s refining sector. Overall high-country risk, lack of consistency in fiscal
  regime and depreciating rupee offers little encouragement to foreign investors. Furthermore, in the wake of the Climate change debate; many financial institutions
  are unwilling to fund carbon fuel-based projects which has resulted in a dry up of investment in the sector leading to stagnation in the refinery sector.
•  Existing ports in the Country are facing constraints in import/handling of the petroleum products. The LNG terminal infrastructure will not be able to meet demand after 2026 (Energy Planning & Resource Centre, 2023). There is a pressing need for the development of a dedicated oil import terminal at Hub/Gwadar in order to meet the growing demand for petroleum products.
•  Pakistan lacks strategic petroleum storages whereas the current storage requirements are inadequate. Furthermore, 3rd party access and underutilization of LNG terminals leading to the capacity payments trap. Private sector LNG imports are minimal

Downstream O&G

•  Currently one-fourth of the population are connected to piped gas network whereas LPG and biomass remains the alternative fuel for others.
•  The current allocation of indigenous gas prioritizes domestic consumers based on social considerations, which conflicts with the economic efficiency principle for
  resource allocation.
•  The lack of focus on value addition or efficiency has led to the use of indigenous gas by captive generators, which in turn subsidizes inefficiencies in the economic order.
•  Average UFG losses are in double figures and are fast becoming unsustainable. Furthermore, gas tariff for various sectors of economy is not rationalized.
•  Seasonality of gas demand and volatility in the international oil market accentuates the requirement for building oil and gas storage capabilities to alleviate and absorb
  shocks. Furthermore, seasonality of gas demand in domestic sector adversely impacts the productive sectors of economy. 
• OMC options are restricted due to anomalies (local versus imported product specs) of HSD procurement specifications.

Coal:

• Energy Transition Mechanism (ETM) and global obligations (COP28) as part of nationally determined contributions to carbon emissions need to account for
  safeguarding coal investments.
•  Currently issues of logistics exist for effective utilization of coal. Roads are being used for transportation of coal across country.
•  Reliance on imported coal leads to probable scenarios of international price volatility and supply chain shocks in additional to the burden on foreign exchequer.

Energy Efficiency & Conservation:

The national energy efficiency and conservation policy 2023 sets the saving target of 9 MTOE, with reduction in the GHG emissions by 35 MTCO2E ((NEECA), National Energy
Efficiency and Conservation Policy 2023, 2023). Furthermore, provincial efficiency and conservation agencies are established in Punjab in 2016 and Sindh in 2022. Key statistics with respect to five sectors are listed below.

Table 9 Energy Efficiency Key Statistics

Policy Framework

• EE&C policies and plans are the key levers for decarbonizing the economy and to execute the energy transition agenda in true spirit.
•  National Energy Efficiency and Conservation Policy 2023 delineates that energy conservation remains a strategic priority as a first fuel from planning and decision making to the execution of the action plans of all sectors of the economy. Conservation is the core guiding principle of the NEEC policy 2023 and has been translated into the policy objectives, actions, and measures with an aim to increase the demand for this first fuel in Pakistan.
•  The National Energy Efficiency & Conservation Plan (2023-30) is also approved by the Federal Cabinet in August this year with an investment potential of about $18 billion by 2030. The NEEC Policy 2023 and Action Plan 2023-30 consider energy efficiency as a “first fuel” for decision making at all levels of EE&C intervention in the country. An investment of $1 billion per year is mapped out till 2030 to reap EE&C benefit through public private partnerships and international climate financing platforms.
  ((NEECA), National Energy Efficiency and Conservation Action Plan 2023, 2023)

Overall, the NEEC Policy and Action Plan segregate actions into short, medium and long-term sectoral measures. Activities like identification of opportunities; baseline studies;
formulation of sectoral strategies; development of information systems; demonstration and implementation of low and medium-cost, fast pay-back interventions are considered high priority areas of action during the initial period of policy implementation. Short- and medium-term sectoral intervention plans covering a period up to 2030 will be devised to
ensure systematic implementation of planned activities on a case-to-case basis in collaboration with federal, provincial, and local governments, national & international partner organizations, and private sector stakeholders.

Issues/Challenges

• Demand side energy management (DSM) has not been adequately emphasized. Although, institutional set up in the form of NEECA, PEECA & BEECA exists in the
  country but there is need of effective regulatory mechanism and trained human resource for the implementation of EE&C measures.
•  There are no specific financial/credit products that have been developed for EE&C. The financial sector does not offer performance guarantees and risk coverage for
  investors for investing in EE&C projects. The Green Banking Guidelines (GBGs) is the key step for financial institutions especially for the banks to ensure sustainable
  economic environment. There is need to incorporate concessional re- financing in the GBGs. The existing financing schemes constitute high mark-ups and do not offer
  any relief to industrial sector to initiate EE&C measures especially the small and medium enterprises (SMEs)
•  Limited testing facilities are major barriers to ensure effective implementation of appliance regulations. The end users do not possess information and capacity to
  identify and implement energy efficiency measures. Similarly, industry has their own issues as in the absence of independently certified auditors, industry rely on their in
  house staff’s judgment on EE&C projects which, lack the training/acumen to understand and perceive such interventions.
•  Information asymmetry exists between the producers and consumers. The dissemination of information, about the importance and benefits of opting energy
  efficiency and conservation measures, to all types of consumers, is crucial, particularly women in household. However, sustained efforts are needed to increase awareness about EE&C measures. Awareness of energy efficiency opportunities in the commercial sector is even lower than the awareness in the industrial sector. Real
  Estate Developers do not take the EE aspects into account during the design of commercial properties such as shopping malls, housing schemes, etc. Similarly, financial institutions lack awareness on energy efficiency, especially with respect to assessment of technical and economic viability of EE projects.

13th Five Year Plan 2024-29

The major issues faced by different subsectors of energy and the underlined policies as well as the interdependencies of various subsectors have been outlined above. For such herculean task a robust framework is needed that understands our local needs and provides the basis for prioritization of public investments and to show a path for sustainable development for energy sector in Pakistan whereby supply of affordable energy is essential for the growth of middle class and younger population of Pakistan.

Objective

Objective setting for the 13th Five Year Plan is based on the prioritization frameworks of 5E and 4RF which yields prioritization strategy for the plan period. SDG 7 is also included in this ambit. The review of the last 10 years needs to be looked into the perspective of the guiding frameworks (4RF and 5E frameworks) which then leads us to four (4) macro-level thematic areas of our focus that forms the basic architecture of the 13th five-year plan. Development frameworks of 4RF and 5E will guide the strategy for 13th five-year plan. 

Prioritization Frameworks
Sustainable Development Goals-7

• SDG Goal 7 delineates ensuring access to affordable, reliable, sustainable and modern energy for all, enhancing the share of renewable energy as well as
  accelerating the rate of energy efficiency.
•  Access and affordability are intertwined whereby our affordability is on decline whereas access is particularly focused via PSDP investments. However, reliability of
  the energy sector w.r.t climate change and technological advancements possess risks to the energy value chain and the development paradigm of the country. Furthermore, sustainability from environmental as well as financial perspective remains the Achilles heels of the energy sector of Pakistan. This five-year plan will
  invariably focus on these thematic areas as part of its strategy. 

Resilient, Recovery, Rehabilitation and Reconstruction Framework (4RF)

•  The 4RF document is a strategic policy and prioritization document that guides the recovery, rehabilitation, and reconstruction of Pakistan. The 4RF document provides programmatic priorities, policy framework, institutional arrangements, financing strategy, and implementation arrangements for resilient recovery, rehabilitation,
  and reconstruction.
• With reference to energy, SRO4 of the 4RF refers to “restore and improve basic services and physical infrastructure in a resilient and sustainable manner”. Access to
  energy and resiliency of the energy value chain with respect to climate change mitigation and adaptation are given paramount importance. 

5E Framework

Whereas the 5E Framework of the Planning Commission of Pakistan is a roadmap aimed at Turning Around Pakistan. Energy remains one of the five priority areas of the 5E framework. 5E framework document stresses on the following aspects of energy:

•  Diversification and Indigenization
•  Energy Efficiency and Conservation – Demand Side Interventions
•  Infrastructure Development
•  Private Sector Investments
•  Regional Cooperation

Prioritization Strategy

The review of the last 10 years, key issues, policy framework and the guiding frameworks (4RF, 5E) leads us to four (4) macro-level thematic areas of our focus that are described below as well as forms the basic architecture of the 13th five-year plan. 

Diversification & Indigenization of Energy Supply Chain:

For long term energy security, it is essential to diversify energy mix by investing in renewable energy sources like wind, solar, and hydro power. Likewise, Thar’s indigenous sources will be utilized in an efficient and environmentally responsible manner. Furthermore, indigenizing the supply chain requires localization of technological hemisphere, being a crucial component to ensure self-sufficiency, must be gradually enhanced across the entire value chain of the energy sector. This thematic area stems from 5E framework and promotes local manufacturing.

Affordability/Competitiveness of Energy

The affordability of electricity plays a critical role in enhancing regional competitiveness and facilitating productive utilization of energy resources. Furthermore, affordability for energy poor households remains cornerstone of the GoP policy. To maintain regional competitiveness, it is essential to ensure that electricity tariffs are competitive for
businesses, allowing them to effectively utilize energy for productive purposes. Advent of CTBCM and its long-term affect is expected to bring competitiveness in electricity market especially for the industries and manufacturing sector. Furthermore, successive iterations of IGCEP will ensure that only least cost generation capacity is procured to ensure best possible affordability of electricity supply.

For multifarious reasons, energy price is unaffordable for majority households and uncompetitive for firms further aggravating the inflation cycle.

Lower demand due to higher prices negatively affect the utilization of electricity as well as fuel infrastructure which further aggravates the financial health of the sector.

This thematic area is also linked to SDG 7

Financial Sustainability of Energy Sector

The financial sustainability of the energy sector, coupled with an effective circular debt management plan and the establishment of a liquid energy market, is crucial for achieving an optimum mix of productive and consumptive use of energy resources. Furthermore, the establishment of a liquid electricity market, characterized by efficient power trading mechanisms and market-based pricing, promotes competition, transparency, and market efficiency. Similarly, efficient and robust market designs for indigenous and imported gas (LNG) are essential for ensuring financial discipline.

Financial sustainability and solvency of the energy sector remains the Achilles heels of not only the energy sector but also for the economic order of Pakistan. Adherence to the Circular debt management plan is crucial for the financial sustainability of the energy value chain including major subsectors of energy. This thematic area stems from 5E frameworks.

Private Sector development/ Investment

Private sector development in Pakistan’s energy sector involves fostering partnerships between the government and private entities to enhance energy infrastructure, attract
investments, and promote sustainable practices. Initiatives may include public-private partnerships, regulatory reforms, and incentivizing private investment in renewable energy projects to diversify the energy mix and address challenges like power shortages. Ongoing collaboration and policy support are essential for the successful development of the private sector in Pakistan’s energy sector.
These 4-macro level thematic areas of priority are intertwined from the perspective of interventions. Adding indigenous supplies over the next 5-10 years will help reduce the
electricity tariffs thus helping achieve the affordability/competitiveness of energy supplies. Whereas on the contrary, sound financial management may negatively affect affordability in the shorter run. However, financial resilience will positively affect affordability in the longer run. Similarly, diversification of supplies may hurt affordability in the shorter run but will also help isolate the country from external price and supply chain shocks.

Targets vis-à-vis Outlook 2024-29 and beyond

Pakistan’s economy swiftly recovered from the pandemic and maintained a growth rate of  5.97 percent in FY 2022. Such a growing trend remained volatile due to various reasons including numerous economic challenges, shrinking fiscal space, volatile exchange rate, mounting current account deficit, inflation, energy sector bottlenecks, and political instability in the country32. Such volatility and shocks in the economy derailed the economic growth momentum and brought it less than one percent in FY 2023. Consequently, the energy demand across all sectors will be affected accordingly and the projected energy supply is expected to grow from almost 82.6 Mtoe in 2022-23 to 113.5 Mtoe by 2028-29 and ultimately reaching to 134.55 by 2035 (see Table 4).

However, in recent years, the country has begun a comprehensive shuffling of energy sources by dropping decades-consistent imported fuels. This is also in line with the Government’s decision to promote the use of indigenous resources such as coal and renewable resources for power generation.

Table 11 Projected Final Energy Consumption MTOE

The projected final energy consumption trend shows that 32% of the total energy is going to industries (23.6 MTOE), highlighting their crucial role in the economy. Despite increase in absolute terms from 20 MTOE in 2023-24 to 22 MTOE in 2028-29, the share of transport sector decreases from 33% to 30%, showcasing a promising move away from fossil fuel dependence in this sector. Domestic consumption at 15.8 MTOE (21%) and the commercial sector at 2.4 MTOE (3%) show moderate changes, while agriculture’s share remains small but stable at 1.2 MTOE.

Due to the recent shuffling of the energy mix, future power generation will be made more environmentally friendly by adding more hydro and non-hydro renewable sources and reducing the use of fossil fuels. As an outcome, cleaner energy sources such as hydel, wind and solar are expected to increase their share in the projected power generation mix whereas share of thermal based power generation will decline and RFO based power generation will be discontinued from 2025-26 as per the existing plan. Details of the power generation mix in terms of GWh can be seen at table 5.

Table 12 Projected Power Generation Mix (GWh)

Policy Interventions / Programs and Initiatives

In view of the analysis of our issues, objective setting and targets of the 13th five-year Energy plan, details of the subsector strategies and plan is outlined below

Power Sector
Power Generation

Indigenized, least cost and financially sustainable generation of power is imperative for a sustainable power sector. In order to achieve this goal, the 13th five-year plan will focus on:

• Indigenization of supply with local coal, nuclear, RE (wind, solar and biomass) and hydro projects as per the IGCEP least cost principle will be added during the plan
  period. Similarly, 100% access by 2030 will be completed using the least cost electrification principle offering grid and off grid solutions.
•  For financial sustainability of the power sector, review of the current tariff regime of uncapped dollar indexation in the tariff is in order and any uncapped indexations
  would not be allowed. Furthermore, dollar indexation before and after debt repayments need a review with the clear intention to share risks among stakeholders of the currency devaluation.
•  The Government of Pakistan has approved Framework Guidelines for Fast Track Solar PV Initiatives, 2022 ((GoP), 2022) under which expensive imported fossil fuel-based power plants will be substituted with Solar PV Energy. Furthermore, Fast Track Solar PV Initiatives, 2022 will also include Solar PV Generation on 11 kV Feeders and Solarization of Public Buildings (8900MWp for gird and 4000 MWp for NM) Environment and generation and electricity mix
•  All inefficient and loss-making power plants of state-owned GENCOs of low efficiency to be closed in phases and only efficient power plants should run on merit.
•  Review of the performance of regulator as per the national electricity plan 2023-28 will be completed during the plan period.

Transmission System

• Transmission is considered as the insurance policy of the power sector, therefore financial and operational sustainability of transmission companies of GoP are of
  prime importance whereby technological upgrades and financial discipline is essential to execute the backlog of projects.
•  NTDC will expedite the preparation of Transmission System Expansion Plan (TSEP), which shall be an integrated investment plan. Alignment and sync of TSEP with IGCEP and distribution infrastructure investment plans (DIIP) is integral for the effective long-term planning of the power sector in Pakistan.
•  NTDC will expedite the execution of ongoing augmentation, upgradation and extension projects of grid stations and transmission lines. Furthermore, the capacity
  of NTDC will be enhanced to immediately implement Supervisory Control and Data Acquisition (SCADA) systems.
•  Bottlenecks and congestion in the transmission system (Jamshoro for south and Lahore circle in North) will be removed for smooth operation of least cost electricity
  generator as per the economic merit order of dispatch
•  Incentives and ease of doing business will be done for the private sector participation in transmission sector in line with transmission policy 2015. Furthermore, provincial grid companies will be encouraged to invest in transmission infrastructure of their respective provinces.
•  Necessary amendments in the existing legal framework will be made to facilitate acquisition of land and Right of Way (RoW) for expansion of Transmission &
  Distribution network effectively.

Distribution System

• Distribution segment remains the Achille’s heel of the power sector considering the footprint of GoP, leakages in economic value, governance and infrastructure of this
  segment of value chain. Considerable interventions are required to make it operationally and financially sustainable as a business model to be run with energy markets. Advent of CTBCM on wholesale remains a litmus test for the next in line competition at retail electricity level.
•  GoP will focus on various options of privatization, provincialization, long term concessions, outsourcing recovery or management outsourcing of DISCOs to reduce
  the GoP footprint. Similarly, for the transition period GoP will reassess and reorganize the institutional readiness of DISCOs w.r.t their business plans. Result oriented
  Energy Loss Reduction programmes will be undertaken by all DISCOs during the Plan period to improve the distribution network and reduction in technical losses by
  employing technology tools including Advanced Metering Infrastructure (AMI), Aerial Bundled Conductors (ABCs) and Asset Performance Management System
  (APMS) on distribution transformers. 
•  N E Plan 2023-28 envisages reduction of bad debt from permanently disconnected consumers by forming recovery initiatives with local and provincial governments,
  entities, and law enforcement agencies and it will be proactively pursued during the plan period. Capacity building of DISCOs and Bulk Power Consumers (BPCs) is to be
  done to operationalize CTBCM. Moreover, operational efficiency of DISCOs with an enabling business model will be ensured during the transition period.

Fuel Sector

During the 13th Five Year Plan, the fuel sector will implement policy reforms to enhance indigenous oil, gas, and coal production, refining capacity, and with special emphasis
rationalize fuel consumption in major sectors like transport.
The long-term financial sustainability of the energy sector depends upon price deregulation in the mid-stream and downstream. Furthermore, clearly demarcating roles and
responsibilities of regulator and policy makers for the upstream to offer a one-window operation. This deregulation would be implemented in consultation with all local
stakeholders in order to ensure a smooth rollout and avoid any dry out situations in the country.
Fuel sector strategy proactively anticipates the advent of EV technology in transport sector and the associated benefits for lowering import bill and emissions. For the said purpose, GoP promulgated EV policy and subsequently EV charging infrastructure regulations are notified by NEPRA for facilitation of the private sector investments.
A summarized position regarding policies and strategies to be persuaded during 13th Five Year Plan period for addressing the key sectoral issues are as follows: –

Upstream Oil & Gas

•  E&P policies would be reviewed to incentivize investment in exploration and production particularly tight gas, shale gas, offshore production.
•  An upstream regulator to be established for bifurcation of policy and regulatory functions currently exercised by the Petroleum Division. 

Midstream O&G

• Setting up at least one new deep conversion, state of the art crude oil refinery to bridge the demand supply gap in the local and imported refined petroleum products
  and better-quality fuel products as per refinery policy 2023.
•  Upgradation and expansion of the existing LNG infrastructure in the country through the development of additional LNG terminal, an onshore storage facility and allied
  infrastructure to cater for the increased demand for imports of LNG.
•  To supplement the indigenous gas supply in addition to LNG imports, natural gas import projects like TAPI and IP would be pursued expeditiously in the context of regional cooperation and energy security. Furthermore, possibilities of connecting with energy-rich regions of UAE and Oman through pipelines would be explored
  during the plan period.
•  Considering existing constraints and the growing demand of petroleum products, a new terminal location outside Karachi (at Gwadar, Hub etc.) will be pursued to
  provide strategic security to the country’s fuel supply chain.
•  Cross-country oil pipeline will be geared to handle dual fuel with additional oil depots installations and storages to ensure robustness in energy supply chain.

Downstream O&G:

•  Rationalization of gas tariff for all sectors of economy shall be undertaken to prevent the further build-up of circular debt. This will encourage consumers towards EE&C as well as shift consumers to alternatives such as LPG and electricity substitution particularly for water and space heating. Furthermore, a robust framework for
  targeted subsidies will be employed during the plan period.
•  For accelerated adoption of electric vehicles, necessary regulatory, legal frameworks and technological standardization will be actualized to attain the prospective
  benefits on import bill and emissions.
•  To tackle the strategic needs of the country, gas storage facilities would be built at depleted gas fields.
•  To liberalize the gas markets and enhance competition, the existing structure of gas utilities would be revamped including unbundling the two-gas company’s infrastructure into distinct entities responsible for transmission and distribution.
•  Gas trading companies may be established for not only procurement of hydrocarbons but also to extend risk management services, swaps in energy markets,
  hedging short- and medium-term exposure, financial assessment of LNG markets and chartering of LNG vessels.
•  A robust framework for optimal balance between long term gas contracts and spot buying would be developed.
•  Development of alternative fuel such as biofuels, hydrogen etc. will be materialized via corresponding policy and regulatory frameworks.

Coal sector strategies and plan

• Increasing local coal production and effective economic utilization of this indigenous resource remains the integral part of this 5-year plan.
•  It is envisaged that imported coal power plants will be converted on local coal which would help save burden on foreign exchange and international price shocks.
•  In addition to power generation, efforts would be made to utilize Thar Coal reserves in fertilizer via coal gasification and petrochemicals industries through coal
  liquefaction.
•  For higher utilization of coal especially Thar, its supply chain routes including railways need to be strengthened and the Thar Coal Rail Link project will be completed during the plan period.

Integrated Energy Planning

•  Vision 2025, National Electricity Policy, 2021 and National Electricity Plan, 2023-28 emphasize the establishment of integrated energy planning framework.
•  Planning Commission, by taking the lead, has already started working on establishing a framework for an integrated energy planning for sustainable development of the country. An Energy Planning and Resource Centre (EPRC) has been established at Planning Commission which will support the development of a long-term
  development strategy and informed decision making via medium- and short-term planning. It will also provide a viable inter-agency coordination mechanism for
  identifying, resolving, and preempting anomalies. It has already provided an Energy Outlook for 2035 focusing on long term energy demand and supply. During the plan
  emphasis would be to build capabilities across GoP entities to perform various analysis and projections on modern analytical tools.
•  Existing efforts will be institutionalized on recurring basis by establishing EPRC on permanent basis after completion of first phase by June, 2025 of the IEP project
  under PC-I regime. 

Energy Efficiency and Conservation (EE&C) strategies and plan

•  National Action Plan (NAP) Energy Efficiency & Conservation (EE&C) 2023-30 identifies 29 major action areas with an investment potential of 1 billion USD per
  year to reap EE&C benefit through public private partnerships and international climate financing platforms.
•  The NAP is designed as a living document which is flexible, measurable, and revisable to adapt changing conditions and open to innovations in process and methods. The actions are divided into three components i.e. regulatory, capacity and advocacy. Further, the NAP 2023-2030 ensured integration of the provisions/measures of the
  NEEC Policy 2023 with all the cross-sectoral policies and plans, wherever it was required.
•  Pakistan Energy Label Regulations, Banning the Inefficient Product, Pakistan Energy Conservation Building Codes-2023, Public Registry Systems, and robust awareness campaigns will be pursued rigorously.
•  GoP to facilitate the implementation of the EE&C targets, financing through international development partners with local assistant from federal and provincial
  government as well as Private / Public Private Partnership.

Implementation Framework/ Matrix

Optimizing Water Resources: Toward Efficiency and Sustainability

Introduction

Pakistan is endowed with abundant water resources, including the Indus River and its tributaries (Western Rivers: Indus, Jhelum, and Chenab; Eastern Rivers: Ravi, Sutlej, and Beas) that flow down from the Himalayas and Karakoram heights, originating from the world’s largest glaciers. The Indus River System has an average annual flow of 142.03 MAF (WAPDA, 2023). Additionally, Balochistan’s surface water resources have a potential of 8.74 MAF (Tareen et al., 2008). The country boasts the world’s largest contiguous irrigated network, which includes three storage reservoirs with a live storage capacity of 13.44 MAF, 19 barrages, 12 inter-river link canals, 2 syphons, and 44 canal commands. The network extends over 64,000 km of main canals and distributaries, with watercourses covering an additional 1,621,000 km, as shown in Figure-1.

Figure-1: Schematic Diagram of Indus Basin Irrigation System

Groundwater, as second major source of reliable source of water, contributes 50 MAF of water (NWP-2018). Pakistan possesses fourth largest irrigation network in the world, serving 48 Million Acres of cultivated land. The country has a large cultivable land base of 86 Million Acres (MA). Hence, the irrigated land base at present corresponds to 55.30 percent of the total cultivable area of 86 MA (WAPDA). Being an agrarian country, agriculture is considered as backbone of the country and its consumption needs are critically dependent on the Indus River System. Agriculture contributes towards 19.2% of the country’s GDP, providing water for almost 94% of the food and cash crop production that engages 50% labour force of the country, and contribute more than 63% to the raw agriculture commodities, which Pakistan exports annually, likewise, increasing demand of water for hydropower generation, which contributes 28.70% of total energy production, industrial development, domestic uses and environmental flows is also incredibly critical. Therefore, the role of water resource for the survival and development of the economy of the country is very crucial.

Current Water Scenario

Pakistan is currently experiencing a gradual transition from being a water-stressed to a water-scarce country. Several factors contribute to this shift, including population growth, industrial expansion, inefficient irrigation systems, unsustainable groundwater exploitation, insufficient storage capacity, low water productivity, and low water-use efficiency. Additionally, contamination of both surface and groundwater resources exacerbates the situation. These challenges collectively result in significant quantitative and qualitative water losses.

To address these pressing issues, the long-term planning within the water sector acknowledges these harsh realities, attributing them to the principles outlined in the National Water Policy. The foundational conceptual framework will embrace the Integrated Water Resources Management (IWRM) approach, aligning with the objectives of the National Water Policy.

The nexus between water, food, climate and energy securities has become increasingly apparent amid the looming water crisis. This comprehensive plan is designed to account for and respond to this well-established nexus. The guiding principles shaping the planning process include equity, efficiency, affordability, participatory decision-making, environmental sustainability, and practicability, aligning with the directives set forth in Vision 2025 and the National Water Policy.

Review of Pervious Five-Year Projects (2018-23):

Over the past five years, water sector projects were guided by a two-pronged strategy aimed at achieving comprehensive water security for all. The strategy focused on:

•  Demand management; and
•  Enhancing water availability based on Integrated Water Resources Management (IWRM) approach.

Policy Initiative taken during Year 2018-23

Integrated with two elements of strategy, following measures were tailored and implemented during the five years’ tenure:

Medium/small Dams

As Implementation of large dams such as Diamer Bhasha, Kurram Tangi and Mohmand dams are taking substantial time for completion, quick alternatives were adopted for the sake of system augmentation. Construction of medium/small dams was planned and implemented all over Pakistan (especially in Balochistan) on fast-track basis.

Conservation Measures:

After 18th Constitutional Amendment, On-farm Water Management and High Efficiency Irrigation System subject have been shifted to provinces. However, other water conservation measures (Large Storages, lining of irrigation channels and Watercourses, Irrigation system rehabilitation, and modernization of existing barrages) were given priority to achieve water availability targets of Vision 2025.

Demand Management:

Rationalization of water usage by management of demand in all sector across the board was adopted as complement of system augmentation measures.

Performance Review:

Financial Review

As PD&SI embark on a thorough financial review spanning the last five years, a brief look over fiscal landscape of water sector projects is presented as under. This retrospective analysis will delve into financial intricacies of key projects, providing insights into financial performance, investment strategies, and overall economic impact over the past half-decade.

*As per 12th Five Year Plan, the projection was Rs.519.00 billion but only Rs.364.871 billion were actually released/ expenditure, which is 70.30% of the projection.

Physical Review

From ground breaking of projects to transformative developments, the following table provides physical dimensions that reflect major progress.

Reasons for Average Performance:

•  Inadequate yearly PSDP allocation against year-wise physical and financial phasing of PC-Is and yearly demand.
•  Slow execution of physical works due to land acquisition, floods, court cases and other implementation issues.
•  Revision of development projects due to cost escalation, poor planning / changes in design parameter.

Imperatives Identified:

In pursuit of cost-effective and sustainable investments, the following factors would be considered primarily:

•  Cost effective investments by proper project Feasibility Study, Detailed Eng. Design, Planning and Processing.
•  Effective monitoring & evaluation and proper accountability.
•  Approval & implementation should be based on Concept Clearance, proper feasibility study, detailed designing, clear ownership of the project by the stake holders and project implementation schedules should be based on available financial resources.
•  First, land acquisition to be made in one go then the actual project starts.
•  All stakeholders should be taken on board at the time of formulation of development plan and budget allocation.
•  All development programs should be formulated in line with the Government priorities/ policies for effective investment.

Sectoral Issues

Declining Water Availability:

Pakistan receives snowfall mostly in its Northern Areas during winter season. Rainfall in Pakistan is markedly erratic in magnitude, time of occurrence and aerial distribution. The mean annual precipitation ranges from less than 100 mm in parts of the Lower Indus Plain to over 750 mm near the foothills in the Upper Indus Plain.
Pakistan is dependent on the three western rivers of the Indus (Kabul, Jhelum and Chenab). The three eastern tributaries of the Indus – Ravi, Sutlej and Beas were allocated to India for its exclusive use. Currently about 2.66 MAF of water (WAPDA 2023) flows from India to Pakistan through these eastern rivers, with an additional 3.33 MAF of run-off generated in their catchments within Pakistan. The contribution of Kabul River to Pakistan’s total surface water is 21 MAF.
According to IRSA facts and figures 2022, the Indus River System receives an average annual inflow of about 146 to 150 million Acre Feet (MAF) of water, mostly derived from snow and glacial melting. Pakistan’s current water availability at canal head works is about 97.51 MAF with estimated annual losses of about 50 MAF. Pakistan extracts about 50 to 52 MAF from the aquifers and has already crossed the sustainable limit of safe yield (WAPDA).
Vulnerability to Climate Change:
Pakistan ranks 5th in the Global Climate Risk Index 2023. This ranking is based on weather related 100 event from 2000-19. The 2022 devastating floods in Pakistan has shown high vulnerability of the country to climate change despite the fact that Pakistan’s contribution to carbon emission is less than 0.9% of the total global emissions.
Supply – Demand Scenarios:
The current population of Pakistan is about 241.49 Million increasing at an annual growth rate of 2.55% according to the First Ever Digital Census approved by CCI on 5th August, 2023. Compared to the increase in demand, the additional water available is 19 per cent of the current use. Obviously, this situation would become much worse by 2035 if the water supply remains the same, while the population increases to 298 million as forecasted by the United Nations – World Population Prospects (Figure 2).

Figure-2 Pakistan’s Demographical Data (298 Million–2035) Data Source: United Nations – World Population Prospects.

WAPDA made an assessment of the water demand for the years 2025, 2035 and 2050 in the document, “Pakistan National Water Resource Strategy – 2002”. The demand forecast assumes that the cultivated areas need to be increased by 48 per cent in order to support the food requirements of the increased population. WAPDA concluded in these reports that since the water supply is limited, it would not be possible to produce sufficient agricultural products if the water and yield efficiency due to non-water means (e.g., fertilizer, improved seeds, better farming techniques etc.) stays at the current levels. The document states “In view of past experience, the target of 50 per cent increase in agricultural yields (non-water
inputs), is achievable and, therefore, additional water of 37 MAF at the canal head should meet all agricultural requirements provided concerted efforts are made, supported by research and other measures besides further improvements in the irrigation network, to enhance the element of demand-based supplies”.
For the purpose of determining a range of future demands, the following three scenarios have been developed in a report of WAPDA Vision 2025, Figure 3:
Scenario 1: 50% increase in yield due to non-water means (WAPDA assumption)
Scenario 2: 25% increase in yield due to non-water means (most likely)
Scenario 3: No increase in yield due to non-water means (worst case)

Figure 3: A comparative analysis of scenarios under different options. Source: WAPDA Vision 2025.

Irrigation for Food Security:
Despite its impressive and continuously growing agricultural production, the country is still facing high levels of food insecurity. Therefore, the need for irrigation is paramount to ensuring food security, given the country’s reliance on agriculture as a primary economic activity. With a predominantly arid to semi-arid climate, erratic rainfall patterns, and seasonal variability, reliable irrigation systems are indispensable for sustaining crop production throughout the year. Agriculture contributes significantly to Pakistan’s GDP and employs a large portion of its workforce, making it crucial for both economic stability and livelihoods. Efficient irrigation methods not only support staple crops like wheat, rice, and cotton but also facilitate diversification into high-value crops, enhancing farmers’ incomes and overall food availability. Additionally, proper irrigation management can mitigate the impacts of climate change, such as prolonged droughts or extreme weather events, safeguarding against potential food shortages and bolstering the nation’s food security. Therefore, investing in modernizing and expanding irrigation infrastructure remains imperative for Pakistan to meet its growing population’s nutritional needs and to ensure long-term agricultural sustainability. To harness uncultivated land for enhanced food security, Pakistan could implement comprehensive land reclamation programs coupled with targeted agricultural extension services. Additionally, incentivizing and supporting smallholder farmers to adopt sustainable farming practices on these lands can unlock their potential to contribute significantly to the nation’s food production goals. The land use status is provided in Figure 5. 

Figure 5: Pakistan Land use Potential for Agriculture

According to Agricultural Statistics of Pakistan, the country has an additional area of 20.3 Million acres (MA) that can be brought under irrigated agriculture. This includes 9.8 MA in Balochistan, 3.9 MA in Punjab, 3.5 MA in Sindh and 3.1 MA in Khyber Pakhtunkhwa. This scenario demands enhancement of water storages of all feasible dam sites on run of river/ flood channels.

7.1 Rising Beyond Poverty: A Roadmap for Sustainable Development Goals

7.1 POVERTY REDUCTION

Ending poverty in all its forms and dimensions by 2030 is the first and main goal of the Sustainable Development Goals (SDGs), which is a National Development Agenda, hence a national obligation to follow, achieve and report. The World Bank defines poverty as the “pronounced deprivation in well-being” which means that the people are unable to meet a minimum level of income or consumption that puts them above a minimum threshold. The national poverty, however, is computed using the Cost of Basic Needs (CBN) that follows concept of absolute poverty highlighting households below the poverty line. It gives an outcome of the policy interventions thus an outcome indicator. On the other hand, Multidimensional Poverty Index (MPI) provides input estimates of poverty explains the situation based on the changes in geographical deprivations in three dimensions, i.e, education, health and standard of living. World Bank estimates ($2.15 a day), CBN based poverty and inequality estimates, and MPI estimates show decline in poverty, inequality and improvements in socioeconomic geographical deprivations during the last decade. Although decline is evident in both urban and rural areas, yet rural poverty is significantly higher than urban poverty. Economic growth is considered to be a necessary condition for poverty reduction35; however, it is also argued that growth alone is not sufficient36. The composition and spread of growth determine the impact that growth may have on poverty. Similar to the global evidence in Pakistan, growth is also considered a sole and the most important determinant of poverty reduction. It may also be linked with the decline in inequality, especially when it is growth led by the agriculture or services sector. Other determinants include decline in unemployment; increase in wages; surge in pro-poor public expenditures including PSDP; improvement in social protection coverage (both CCT and UCT), and better access to markets and financial markets. Macroeconomic instability places a heavy burden on the poor in the form of higher prices and lesser job opportunities, hence it is the most vital indicator to eradicate poverty on a sustainable basis.

Poverty and Inequality:

Growth associated with progressive distributional changes may have a greater impact on poverty than growth that leaves distribution unchanged. Although there are several arguments against the impact of better distribution on poverty reduction, growth accompanied with better redistribution of resources is inevitable for sustainable reduction in poverty in the long run. Policies that improve the distribution of income and assets within a society, such as land tenure reform, pro-poor public expenditure, tax credits, social protection, and measures to increase the poor’s access to financial markets are essential elements of any country’s poverty reduction strategy. The formulation and integration of a country’s  macroeconomic policy and poverty reduction strategy are iterative processes. Poverty reduction strategies need to be articulated (i.e., objectives and policies specified), then costed, and finally financed within the overall budget in a noninflationary manner. High poverty and inequality are pervasive characteristics of the developing world; however, they are not immutable features of these economies. There is convincing evidence pointing to a robust decline in the levels of absolute income poverty over the last decades however changes in income inequality have been much less clear (Gasparini, 2013). However, a positive correlation may not always be the case. For instance, in the case of China, there was a sharp reduction in poverty accompanied by a significant increase in inequality. For Pakistan decline in poverty is not at all associated to changes in inequality as mentioned by the straight line inequality trend whereas poverty has been continuously declining since 2005- 06.

Figure 1: Poverty and Inequality

Inequality estimates, various measurements based on different definitions, give different results. Besides Gini Coefficient and Palma Ratio, the stark reality of inequality in Pakistan is revealed by disparities in income. The NHDR 2020 highlighted that the poorest 1 percent of the population holds only 0.15 percent of national income, compared to the richest 1 percent, which holds 9 percent of national income in 2018–2019 The same report argues that People, Power and Policy are the main drivers of inequality in Pakistan.

Socio Economic Geographical Deprivations

Socio Economic geographical deprivations are captured in three dimensions through Multidimensional Poverty Index (MPI). It constitutes education, health and living standard dimensions – measured by 14 variables in 2019-20. It give complete and composite picture of socio economic deprivations in different regions. According to the latest MPI report based on PSLM 2019-20 estimates show 19.9 percent MPI in Punjab whereas it is double in Sindh and Khyber Pakhtunkhwa and triple in Balochistan. More alarmingly, district wise MPI ranges between 95 per cent in Sherani to 2.55 percent in Islamabad. The extent of dispersion is quite high; Balochistan average estimate is 60.2 percent which is 35 percent below than the highest MPI. These regional disparities raise equity concerns37. They contribute to overall within-country inequality; and, linked to inequality of opportunity, ability and capability. It may also have harmful implications for economic efficiency, as limited opportunities for those stuck in the wrong place lead to the underutilization of potential and constraints overall growth (Che and Spilimbergo, 2012)38. Furthermore, urban-rural disparities can fuel social tensions and pathologies (Case and Deaton 2020)39;increase populism and resentment towards urban elites (Rodríguez-Pose 201840); or threaten countries’ social fabric and national cohesion, and in extreme cases lead to conflict, particularly where the disparities reinforce existing ethnic, racial, linguistic, or religious divisions. Raza and Zafar (2021) 41 reveals 67 percent complementarities between MPI and money metric poverty using two data sets. The complementarities, nevertheless, do not show the extent but the number of incidences. 

Review of the 12th Five Year Plan (2018-23) 

Sectoral Issues: COVID,

Floods and Recession

The trend of a gradual decrease in poverty before 2020 is likely to be interrupted post 2020 owing to the disruption caused by the COVID-19 crisis, 2021-22 devastated floods and recent recession. Annual Plan 2021-22 reported a simulation exercise that shows that poverty may not increase due to improvement in the coverage of BISP based social protection. After the V Shaped (K shaped) recovery in a few months during the smart lockdown, it was also assumed that people may face lesser problems than we are foreseeing during floods. Preliminary estimates indicate that the recent floods in Pakistan may increase the national poverty rate by 3.7 to 4.0 percentage points, pushing 8.4 to 9.1 million people into poverty. Multidimensional poverty is expected to rise by 5.9 percentage points, affecting an additional 1.9 million households. The depth and severity of poverty will worsen for those already impoverished before the floods. Inflation further exacerbates the situation by reducing purchasing power, with poorer households facing higher welfare losses due to rising food prices, while richer households are more affected by energy prices. Although inflation rates are similar across income levels, poorer households suffer more as they have limited savings and must either reduce consumption or opt for lower-quality goods, leading to immediate welfare losses, inadequate access to food and energy, and long-term impacts on human capital, productivity, and inequality. The increase in poverty linked to COVID-19 and floods might be temporary, potentially offset by a V-shaped recovery post-COVID and normalization after floodwaters recede. Increased social protection transfers through the Benazir Income Support Programme (BISP) may help vulnerable households. However, the long-term effects of these crises on human capital, productivity, and nutrition could negatively impact growth and efforts to reduce poverty and inequality. Without current data, these estimates remain speculative, necessitating careful examination of potential adverse impacts once actual figures become available 

Efforts to Alleviate Poverty, Reduce Inequalities and Regional Disparities 

Since 2013, Pakistan’s poverty headcount has witnessed a persistent decline at national level, as well as both in urban and rural areas. The definition of poverty for estimation was changed in 2013-14 from the Food Energy Intake (FEI) technique for estimating consumption based poverty to the Cost of Basic Need (CBN) technique with a larger basket of consumption items. Table 1 presents Poverty line, poverty estimates, based on the CBN poverty lines adjusted by CPI, for all survey years of the last decade. The data shows that the percentage of people living below the poverty line has declined from 29.5 % in 2013-14 to 21.9% in 2018-19. Poverty, both in rural and urban areas, has declined by 7.2 percent and 7.4 percent respectively. Remittances, growth, pro poor expenditures (in PSDP/ADP especially), increase in non agricultural income in both urban and rural areas, and BISP Social transfers are the main reasons for decline in poverty Provincial estimates of poverty for the year 2018-19 shows highest poverty in Balochistan and lowest in Punjab. Results are reported for both including and excluding Fata which shows 0.6 percent point difference, i.e, 21.9 percent and 21.3 percent. It makes a good 2.7 percentage points difference in the poverty estimates of Khyber Pakhtunkhwa.

Table 1: Poverty trends

Figure 2: Poverty – 2018-19

Gini index is a measure of the extent to which the distribution of income (consumption expenditure in case of Pakistan) among individuals or households deviates from a perfectly equal distribution. The value of Gini index for Pakistan did not fluctuate much in the past. Interestingly, rural inequality is lesser than urban. Sindh has the highest inequality whereas Balochistan has the lowest. The incidence of poverty is highest in Balochistan whereas the inequality is the lowest. This may imply that higher poverty is associated with lower inequality which is against the evidence and theory. Thus it is important to examine the poverty and inequality linkages with livelihood and economic opportunities as well as distribution of resources as moderating and mediating components. 

Figure 3: Inequality Estimates based on GINI index 

In order to complement the consumption-based poverty estimates, Planning Commission also adopted Multidimensional Poverty Index (MPI) as a complementary measure of deprivations that lead to poverty in the long run. The most recent estimates of MPI are for 2019-20. The latest MPI report shows that multidimensional poverty index has continuously declined in Pakistan since 2004-05. The latest estimates show 30.5 percent MPI nationally, whereas, 12.5 percent in urban and 41.9 percent in rural areas. The regional disparities between rural and urban shows consistent results with CBN based money metric poverty, However, the difference in MPI is larger than the difference in CBN based poverty. Contrary to CBN based money metric poverty estimates, MPI is lower in Khyber Pakhtunkhwa than Sindh. Though, lowest in Punjab and highest in Balochistan is consistent with money metric poverty estimates. In comparison to 2014-15, estimates (excluding fata) show an improvement by 3.2 percent in 5 years, which is quite slow progress. Our SDG target is to achieve 19 percent by 2030, whereas with current speed we may reach 23 percent MPI incidence. 

Figure 4: Multidimensional Poverty Index – 2019-20

MPI Incidence – Excluding FATA – 2014-15 and 2019-20

The estimates of poverty, inequality and regional disparity are 3 to 4 years old. Although it is an alternate year activity to hold HIES and PSLM surveys, however, amid Census 2023, PBS did not hold HIES surveys after 2018-19. Thus we have last estimates of CBN based poverty and inequality till 2018-19 and latest estimates of MPI till 2019-20. 

Pro-Poor Expenditures

Ministry of Finance reports pro-poor expenditure on quarterly basis. During 2013-2022, the pro-poor expenditures were increased by 11.4% per year. It is almost a 3 times increase in the last ten years compared to 2.6 times increase in CPI. Highest increase was recorded in the Khyber Pakhtunkhwa, especially in 2021-22 followed by Sindh, Punjab, Balochistan and

Federal. Whereas, on average, pro poor expenditures were 7.85 percent in the whole decade. The maximum was in 2016-17 and the minimum was in 2013-14 

Table 2: Pro-Poor Expenditure, 2012-13 to 2021-22

Figure 5:Multidimensional Poverty Index – 2019-20

Social Protection

All the social protection initiatives including Benazir Income Support Programme (BISP), Trust for Voluntary Organization (TVO), Pakistan Bait ul Mal (PBM) and Pakistan Poverty Alleviation Fund (PPAF) have been placed under the administrative control of Ministry of Poverty Alleviation and Social Safety (PASS). 

Ministry of PASS is enabled to achieve the vision of social protection for all through its mandate of:  

• Providing necessities i.e., food and shelter 
• Providing secure livelihoods  
• Investing in human capital  
• Monitoring effective implementation of policies and strategies across federal and provincial institutions.

 f (Box-1).

Similarly, Southern Balochistan package, Ziarat Development Program, South Punjab Poverty Alleviation Program are designed to provide equitable services that reduce the socioeconomic gaps of the deprived regions. 

Human Resource Development 

The success of poverty reduction efforts depends on the development of human capacities through education and training and empowerment through provision of productive assets and growth opportunities. Human resource development is crucial for sustainable poverty reduction. The contours of human resource development move along: (i) improving education outcomes with particular focus on quality and education sector governance; (ii) enhancing knowledge and access to health services, and addressing nutritional deficiencies; (iii) leveraging technology and connectivity for improved development outcomes; and (iv) empowering local government institutions for improved service delivery, accountability and transparency. 

Education 

Providing primary and secondary education is a constitutional undertaking of the state. However, this needs to be implemented in letter and spirit. The quality of education, governance of the school system and curriculum development need a special focus. In order to overcome the high drop-out rates, the syllabus needs to be made interesting and relevant for the students. Schemes need to be put in place which could teach a skill at school to the children so they could assist in enhancing the family income. This would not only increase enrolment but also reduce the dropout rates. Conditional cash transfer programmes of BISP in the education sector alone would not eliminate poverty unless the other causes of poverty are addressed. Hence, there is a need to improve access to education facilities. To ensure transparency and accountability each public education facility can display its logistics/human resource details for information of the beneficiaries in particular and community at large. 

Health & Nutrition 

Health and nutrition are important components of human resource development. Increased income and knowledge about basic health and safe eating reduced poverty makes people afford better diets, improved health care, and healthier living conditions (including WASH). An efficient health care system is required for poor, vulnerable and marginalized segments of society. A comprehensive system of health insurance needs to be in place for poor. Insaf Sehat Card model of KPK can also be replicated in other provinces as well. 

In order to improve health care, there is a need for more qualified medical staff as well as ensuring access to rural poor to at least one working hospital to treat common illnesses and chronic diseases afflicting the impoverished in rural areas and timely treatment. Under-nourishment affects the poor the most. Thus, the poor are at higher risk of lifelong physical and mental disability, leading to low productivity. In order to avoid issues of malnutrition and stunted growth, food fortification, provision of supplements to address deficiency of micronutrients is necessary. A dedicated research institution for improving nutrition outcomes will be instrumental for making informed policy choices and development interventions. Lastly, an overarching nutrition coordinating body to track, oversight and coordinate nutrition led interventions can help improve nutritional outcomes. 

Population and Fertility Rate 

Fertility rate and poverty are also interconnected- the relationship between these two indicators is complex and multifaceted. In many low-income countries, for instance, fertility rates tend to be high. Several factors contribute to this namely, low educational attainment of women and fewer women entering the working population; absence of robust social security systems resulting in more children as a form of security; cultural and religious factors; and, rapid population growth leading to more stress on existing resources. Access to education, particularly for women and girls, can play a crucial role in reducing fertility rates and alleviating poverty. Educated women tend to have fewer children and are better able to participate in the workforce, contribute to household income, and make informed decisions about their reproductive health. Further, access to family planning services, contraceptives, and reproductive health information is essential for empowering individuals to make informed decisions about their fertility. Sustainable economic development, job creation, and poverty reduction strategies can also help lower fertility rates over time. As families become more economically secure, they may choose to have fewer children, recognizing the costs and responsibilities associated with raising a family. In a nutshell, addressing poverty and promoting sustainable development can help empower individuals and communities to make informed decisions about their reproductive health and ultimately contribute to lower fertility rates. 

CPEC and Poverty 

The China-Pakistan Economic Corridor (CPEC) stands as a monumental opportunity to alleviate poverty in Pakistan. This ambitious project encompasses infrastructure development, energy ventures, and economic zones, promising to significantly boost employment opportunities across various sectors. With the establishment of new roads, railways, and ports, remote and underdeveloped regions will gain better connectivity, fostering trade and accessibility to markets. The increased movement of goods and services can stimulate local economies, create jobs, and empower communities, particularly in areas that have historically faced economic marginalization. Moreover, the energy projects under CPEC hold immense promise in addressing one of Pakistan’s persistent challenges: power shortages. By enhancing the country’s energy infrastructure, CPEC can ensure a more consistent and reliable power supply, supporting industries and businesses to thrive. This stable energy supply can catalyze industrial growth, attracting investments and generating employment opportunities in manufacturing and related sectors. As industries expand, they create a ripple effect, providing jobs not only

within the sector but also in ancillary services, thereby uplifting individuals and families out of poverty. Additionally, the focus on human resource development and vocational training associated with CPEC initiatives can equip the workforce with the skills needed to access better-paying jobs, further contributing to poverty alleviation efforts in Pakistan.

 Employment Generation Strategy 

Targeting Rural Poor through Agriculture

Most of the poor living in rural areas do not own or lack access to cheap finances. Through an asset transfer program, the government can explore the option to transfer cultivable land, livestock and other productive assets to the rural poor. Inputs on subsidized prices alongside skill development for efficient use of the transferred assets in rural areas to the rural youth for fish farming, livestock raising, breeding, cultivating high value crops and value addition may be given. This will enable rural poor to come out of poverty on a sustainable basis while also giving a boost to the agriculture sector of the economy. Water efficiency to increase productivity by raising awareness at the local level eventually leads to optimal use of water. Similarly, Modern farming techniques through R&D is the way to improve productivity such as tunnel farming, arrow farming etc. Fishing along the southern Arabian Sea coastline as well as animal husbandry is important, horticulture, livestock and tree plantation are few important areas of interventions to promote better yield in the agricultural related sector. These interventions are important for social and environmental justice. 

Skill Development and Vocational Training Programs

Skill development and vocational training programs are essential for the reduction of poverty. Market based skill development can increase employability of the youth. The culture of skill development can be introduced as part of the school curriculum. In the rural settings, awareness, engagement of local artisans, support for improving the quality of their products, linking them to markets in the country and abroad can help engage the rural youth and women in productive activities and impact their income. International accreditation of local TVET courses/certificates is the need of the hour to improve employability of the local and potential immigrant workforce. Ba Ikhtiyar Naujwan Program (BINP) started in 2023-24, is pursuing a program of skill and vocational training programs by awarding 60,000 paid internships to young graduates across Pakistan. This portal provides a one-stop-shop for the eligible youth to apply for BaIkhtiyar Naujawan Internship Program (BNIP). 

Self-Employment and Access to Finance 

The concept of self-employment should be promoted. Easy and affordable access to finance along with initial hand holding through incubators has proven to be a successful model. Financing may be tagged to compulsory pay back or linked to the number of people employed after a certain number of years. Formulating better policies and implementation plans for expanding access to microfinance and commercial credit for the poorest segments of society is the need of the hour.

To create an enabling environment and make markets work for the poor, self-employment, innovative solutions, innovation challenge funds backed by venture capital and interest free loans; e-platforms and e-learning are crucial for sustainable job creation and development. 

Job Creation for the Unskilled and Uneducated 

There is a need for job creation of the unskilled and uneducated labor force in order to reduce poverty Basic literacy and numeracy; transferable skills including life skills and socioemotional skills; digital skills, which allow individuals to use and understand technology; job-specific skills, which support the transition into the workforce; and entrepreneurial skills are essential for this faction to thrive Integration of Social Protection Initiatives 

There is fragmentation in the social protection initiative of the country. There is a need to build synergies and align social protection initiatives to achieve the poverty reduction targets. Moreover, the focus of these initiatives need to be shifted on assisting the vulnerable segments of the society to graduate out of poverty. In this context, the Ministry of Poverty Alleviation and Social Safety has drafted a National Policy Framework on Poverty Alleviation and Social Protection, which is awaiting approval. In line with the Framework, the provinces have developed or are in the phase of developing their social protection policies. It is expected that these frameworks and policies would help eliminate the duplication and fragmentation of social protection initiatives in the next five years. 

Social Safety Nets 

Social safety nets provide minimal safeguard for the poor and the vulnerable which form an essential element of our poverty reduction strategy. Pakistan has a fairly elaborate network of direct and indirect social protection mechanisms. Direct mechanisms include EOBI, welfare fund, zakat, social security etc. Even though these mechanisms do exist, there is a need to improve governance and accountability in the service providing organizations. Indirect mechanisms include minimum wage, subsidies on food, lifeline tariff on electricity. There is a need to improve the mechanisms to ensure that minimal protection is made available to the poor and vulnerable segments. Redesigning existing social protection programs like BISP with greater focus towards graduation through CCTs (Nashonuma & Taleemi Wazaif) can be instrumental for graduating the poor out of poverty. Lately, transgenders are also included to get Kafalat unconditional transfers. 

Commit to Climate Change Solutions for Poverty Alleviation 

Climate change has exposed the poor to more frequent cycles of natural and man-made disasters. Climate change places compounded stress on our environment, as well as the economic, social and political systems people depend on for food, safety and income. Climate change is also one of many root causes of conflict around the world: it leads to food shortages, threatens people’s livelihoods and displaces entire populations.

Recognizing that the poorest and vulnerable are more prone to facing the brunt of disasters, enhancing preparedness for disaster risk management and capacity are necessary. The network of National, Provincial and District Disaster Management agencies in collaboration with humanitarian national and international NGOs needs to improve their coordination within the minimum possible response time. Building resilience of livelihoods and infrastructure against climate change is essential for poverty reduction in the country.

Disaster preparedness is important and can be done through making people better equipped and reducing the damage of disasters. There is a need to strengthen the communities’ resilience to weather-related risks, including improving the way water and land is managed, building disaster response plans and developing policies that reduce vulnerability to climate change. 

Rural Poverty – A Special Focus

According to the latest poverty estimates, three out of every four poor individuals live in rural areas. Further, the pace of poverty reduction is relatively slow in these areas. It is therefore essential to devise a strategy to address rural poverty. 

Rural population is predominantly less educated, relatively less skilled, mostly engaged in subsistence farming (more than 60% households have less than 5 acres of land holding) and in manufacturing of lower-end handicrafts. Hence, the rural households face the challenge of sustainable livelihood and their wellbeing depends on the outcome of crops. They are the ones who face the brunt of natural calamities (flood, drought, famine etc.) that push them into poverty. Therefore, a sound poverty reduction strategy must take these rural realities into account for effective and sustained poverty alleviation. 

Skewed land distribution cuts against smooth working of land-lease markets, promotes friction among owners and tenants, withholds investments in irrigation technologies and on farm infrastructure, encourages unsustainable use of irrigation water and production practices and impedes technological change. All these factors contribute to an increase in poverty through negative impact on productivity. Skewed land distribution also leads to land degradation. Most farms tend to be small, tenant cultivated, lack land title and insecure tenure for tenants. Thus, the available medium-term and long-term measures to combat land degradation are rarely undertaken, resulting in loss of cultivated area, low yields, and income, and consequent vulnerability for the community as a whole. 

Distribution of available public lands and, undertaking overall land reforms in more effective and pro-poor ways, unlike the past efforts which were largely ineffective, would remain important to create assets for the poor, particularly landless which constitute the bulk of the poor in rural Pakistan. The above in view, following are some poverty reduction measures aimed at addressing the issue of rural poverty:  

• capacity building for high value crops to subsistence farmers,  
• asset (land/ livestock/ seeds/ sericulture) transfer,  
• crop and livestock insurance,  
• extending credit for the rural poor for small business development,  
• conditional cash transfer for rural women who manage livestock,  
• removing agriculture market distortions by ensuring that farmers play effective role 
• in setting prices of agriculture output, 
• and  making arrangement for providing housing to the homeless and landless tenant farmers. 

These initiatives will diversify livelihood sources for the rural population. Moreover, crop and livestock insurance will help them sustain their livelihood. The insurance documents can also serve as collateral for extending agriculture credit to small farmers.

Public Investment for Inclusive Growth 

Allocation of public resources for development projects (under PSDP/ APD) can be inclusive if communities are involved in the process at the local level, in particular with reference to the social sector projects or those mainly serving local communities (education, health, WASH, farm to market roads etc.). However, this can happen only if the communities are effectively organized and empowered to partake in the development process. There is a need to align the overall public investment (PSDP & ADPs) with the stated development objectives and poverty alleviation goals. Each development project needs to be evaluated for its impact on poverty.

The benefits of public investment can be enhanced manifold by meaningfully engaging with the private sector (e.g. under the realm of social responsibility or responsible business initiatives). There is need to develop innovative tools of public-private partnership like private sector adopts a backward district or tehsil for exclusive investments by private sector or offering matching public funds for identified backward areas in specified sectors where private sector organization may also be interested. 

It will not be out of place to mention that the most effective oversight function in respect of implementation of public sector projects can only be performed by the empowered and organized communities and beneficiaries, be it construction of a school, health facility, maintenance of water supply and sanitation or infrastructure projects. Thus, the quality of the outcome of public investment can be enhanced manifold by involving beneficiaries in planning and implementation of projects financed through public investments. 

Important Interventions, Targets/Milestones for the Plan Period

• Increasing public sector social protection spending to 2% – 2.5% of GDP gradually.  
• Reducing CBN based poverty from 21.9% in 2018-19 to 15% by 2028, while reducing multidimensional poverty headcount from 30.5% to 25% over the same period43
• Reducing inequalities in terms of Gini from 0.30 in 2015-16 to 0.27 in 2028. 
• Increase in social protection through BISP by giving universal social protection. More emphasis is required on conditional cash transfers than unconditional cash transfer. Nevertheless, both are important.  
• Change the scope of BISP/Social Protection Program from cash grant to social protection programs that generate economic activities.  
• All provincial governments must establish a Social Protection Fund and must also pave the way for a contributory insurance scheme for informal workers.  
• A Shock-responsive Social Protection strategy is needed that contains standing SOPs on multi-sectoral coordination between provincial departments, as well as among local governments, in any future time of crisis.  
• Identification of informal workers, and enroll laid-off workers for targeted Social Protection. 
• Advocacy around making National Finance Commission (NFC) Award need and performance based with rationalized weight for population, say 30%.  
• Establishing a CPEC Community Connectivity Fund to connect the immediate neighborhood of CPEC main arteries.  
• Introduce and implement climate-resilient agricultural practices across [specific percentage] of agricultural land within the first three years, with a goal to achieve complete adoption by the end 2029. Promote access to finance to small landless farmers to boost agriculture growth  
• Successfully implement the project for uplifting twenty backward districts and initiative work on improving living conditions in the lagging behind ones.  
• Provision of digital infrastructure and easy access to funds to encourage innovation and entrepreneurship, particularly among youth  
• Preparation of a detailed and comprehensive poverty reduction plan encompassing institutional restructuring and aligning policies and programmes  
• Establishing Labour Force Commission to address the welfare issues of the labor force at large including those engaged in informal and excluded sectors.  
• Rationalization age requirement for registration with a TVET institution. 
•  Improving the access integrated database for vulnerable groups such as NSER to all stakeholders to ensure better targeting of the poor.  
• Channelizing Corporate Social Responsibility (CSR) initiatives to reduce poverty in consultation with the corporate and private sector. The National Responsible Framework may sensitize the private sector to expand outreach and coverage of CSR programs for poverty reduction.  
• Adaptation policies must be put in place to decrease the exposure of the most vulnerable populations to climate change impacts. This means devising rules regulating construction in risky areas, such as flood zoning, land entitlement, and building standards. 

Provision of Basic Facilities essential for poverty reduction  

• Providing decent (low-cost) housing to the underprivileged communities and enabling them to access clear water and sanitation facilitation. 
• Ensuring universal adult literacy and primary education across Pakistan as well as ensure quality of education to alleviate poverty on a sustainable basis.  
• Health insurance scheme that targets vulnerable households will be great assistance for the poor to reduce their unforeseen out of pocket health expenditures.  
• Making Health Insurance accessible to all and making both indoor and outdoor facilities accessible to the poor.  
• Land distribution is inevitable to reduce poverty and inequality eventually. Social Protection in the current land holding scenario will not work. 

Financial Inclusion is the key  

• Financial inclusion is the key for poverty graduation. All hurdles must be removed while mitigating the chances of default. 
• State Bank of Pakistan may harness the capacity of Micro-Finance Institutions (MFIs) and Rural Support Programs (RSPs) to identify potential enterprises in the communities they operate in. 
• Using interest-free microfinance as a tool for financial inclusion amongst those living below the poverty-line for those up to 49 PMT on PSC. 
• Interest free Qarz-e-Hasna scheme based on mua’khwat would be a sustainable model in the long run.  
• The state’s policy and regulatory framework may incentivize the introduction of Islamic finance to all the rural areas where small farmers have to take loans from private sector at unreasonable interest rates (sood, riba, usury) 

Indigenous Solutions are essential  

• Development is not possible without indigenous institutions and the government can act as a facilitator.  
• Local solutions (e.g., Akhuwat model and RSPN model) are better than international lessons learnt because they are deep enrooted into the community level. 
• Masjid and other community led committees can play effective role in running mua’khwat model.  Involvement of local communities and their ownership leads to sustainable solutions as well as providing better governance structure through better social capital reducing the gap between local authorities/government.  
• Representation of small farmers, informal workers into policymaking. 

Better Economic conditions are inevitable 

• Growth is essential. Quality of growth is possible through inclusive and sustainable policies. 
• Development funding through PSDP and ADP to revitalize both rural and urban economies. 
• Private investment needs to be channelized in viable opportunities for sustainable growth.  
• Promotion of agriculture and agro-industries-based industries 
• Devise a mechanism to give poor access to water for their fields.  
• Develop a database of small farmers. Digitize the process to distribute procurement bags through biometric identification. This would undercut the role of intermediaries.  
• Low cost urban housing along with quality and security especially for females is required to increase their participation. 

Measures of Better Governance  

• Develop spatial vulnerability index similar to world risk index to identify the essential needs at the tehsils of union councils level. 
• Increase capacity of local administration as well as reduce over-reliance on federal interventions and national level agencies.  
• Developing special support mechanisms for the inclusion of marginalized communities like women, orphans, transgender and persons with disabilities.  
• Institute a forensic audit of the ZTBL. This process should identify loan defaulters.  
• The practice of granting of rural land to senior retired members must not be done without parliamentary approval.  

Implementation Matrix

7.2 Nurturing Social Protection and Empowering Women

Introduction 

Social Welfare is concerned with empowering & mainstreaming poor, vulnerable and needy segments of society to enhance their capabilities to mitigate vulnerability, enhance social protection & social safety net, reduce poverty, address emerging social problems, and manage risk and sudden shocks. The emerged different social problems are deep rooted due to some human rights related issues & socio-economic disparities, un-equal opportunities, non-access, governance, inequality and unforeseen factors etc in the society which requires social welfare services to lessen worries and problems of the targeted segments of the society included approximately 40% poor , children, women, older persons, beggary, patients, persons with disabilities, transgender, minorities, socially excluded, unattended and vulnerable people in the society. 

Social welfare s has envisioned an inclusive development approach by focusing on the most marginalized segments of the society through programs, projects, interventions and non-PSDP initiatives. The targeted beneficiaries benefiting from social services are poor, vulnerable, disadvantaged, women, elderly, persons with disabilities, transgender, religious minorities with the aim to target areas of exclusion to reduce inequalities, enhance equal opportunities, reduction human rights violations, gender empowerment and enhanced safety net coverage and mainstreaming gender into development process. 

Review of 12th Five Year Plan (2018-2023) 

Pakistan’s efforts to reduce poverty face numerous challenges affecting a large portion of its population. Key issues include unemployment, limited access to education, healthcare, income disparities, rural-urban divides, gender inequalities, social issues, climate change, and regional disparities. These are compounded by economic shocks and a growing population, hindering sustained poverty alleviation efforts. Although the poverty rate decreased significantly from 61.6% to 21.5% between 1998 and 2018, Pakistan remains ranked 154 out of 189 on the Human Development Index. 

The COVID-19 pandemic has reversed years of progress in poverty reduction, potentially pushing an additional 251 million people globally below the $1.90 per day poverty line by 2030. In Pakistan, the 2022 floods may increase the national poverty rate by 3.7 to 4.0 percentage points, affecting 8.4 to 9.1 million more people. Multidimensional poverty stands at 38.3%, with stark regional disparities: 55% in rural areas versus 9% in urban areas. 

Pakistan’s social protection system is dominated by social insurance models targeting formal sector employees and retired public sector workers, leaving informal sector workers largely uncovered. Effective implementation of human rights, including for persons with disabilities, is crucial for social inclusion and economic development. Targeted interventions in special education, senior citizen welfare, child protection, and transgender rights aim to ensure that well-being aligns with the realization of fundamental rights. 

Gender equality is a high priority for the government, recognizing its importance for national growth and prosperity. Despite this, Pakistan ranks 145th out of 146 countries on the Global Gender Gap Index, with low scores in health, economic participation, educational attainment, and political empowerment. The National Gender Policy Framework-2022, launched in coordination with various stakeholders, aims to bridge these gender gaps.Staff welfare services, including recreational facilities, day care centers, and hostels for working women, are provided for federal government employees but need upgrading to meet changing human resource needs 

Social Protection Frameworks Structures. 

Developing an appropriate social protection framework is recognized as a strategy to achieve inclusive growth. A draft National Social Protection Framework has been developed to outline the essential contours of Pakistan’s overall social protection system. Federal framework serves a key coordination and consolidation role, which is vital for aiding progress at the provincial level. At the provincial level, the Punjab Growth Strategy and Khyber Pakhtunkhwa’s Integrated Development Strategy also recognize the importance of social protection. Since the 18th Amendment accorded provincial government’s primary responsibility for social protection, it is up to the provinces to develop their own policies, based on the national framework, considering their specific contexts, needs and the prioritization of resource allocations. So far, social protection policies have been developed in the provinces. The Punjab Social Protection Policy is the first ever provincial policy to have the strategic objectives of promoting social cohesion, equity, gender equality, resilience and opportunity. The Sindh Social Protection Authority (SSPA) is a legislative entity formed by the provincial assembly of Sindh in July 2022, entrusted with the development and execution of a comprehensive provincial social protection strategy. Khyber Pakhtunkhwa Social Protection Policy 2022. The Policy classifies social protection into four major components, i.e. Social assistance, social insurance, essential services and labor market policies and work is underway in Balochistan however a social protection and assistance programme is being implemented under BISP and Bait ul mall. The social safety net services have been provided in other regions of the country. 

Policy, Administrative and Legislative Initiatives: 

Human development, inclusive growth, and knowledge economy are the integral part of Pakistan’s growth and development agenda. Implementation of Human rights are central to all these indicators. The Ministry of Human Rights has taken various legislative, policy and awareness measures, which are aligned with the development agenda and SDGs, to uplift the communities through sustainable development. The initiatives are a priority under the PSDP portfolio of the Ministry of Human Rights. The Prime Minister Initiative for Women Empowerment and Prime Minister initiative for Women Mobility were flagship PSDP funded programmes in the development sector for women empowerment. Some new initiatives taken: 

• National Commission on the Rights of Child (NCRC) Act, 2017. 
• Islamabad Capital Territory (ICT) Child Protection Act, 2018, the ICT Child Protection.  
• The Islamabad Capital Territory Senior Citizen Act, 2020  The Domestic Violence (Prevention & Protection) Act, 2020  ICT Rights of Persons with Disability Act, 2020.  
• The Zainab Alert, Response and Recovery Act, 2020 was enacted on 24th March, 2020.  
• Child Domestic Labour included in the list of occupations listed in Part-I of the Schedule of the Employment of Children’s Act, 1991.  
• Anti-Rape (Investigation and Trial) Ordinance 2020.
• The Protection Against Harassment of Women at the Workplace (Amendment) Act, 2022  
• The National Commission on the Rights of Child (Amendment) Bill, 2021  
• The Islamabad Capital Territory Child Protection (Amendment) Bill, 2021  
• The definition of rape under section 375 has also been expanded and gang rape penalized.  
• Legal Aid and Justice Authority Act, 2020  
• Protection of Journalist and Media Professionals Bill, 2021  
• Torture, Custodial Death and Custodial Rape (Prevention and Punishment) Bill 2020.  
• 16 Days of Activism Campaign on women’s fundamental rights through a series of short informational videos covering important topics including sexual harassment, rape, the marriage contract, filing a FIR and women’s inheritance.

PSDP Projects Implemented:

Out of PSDP Initiatives: 

Shelter Home projects at three locations of Islamabad Capital Territory were approved under Bait ul Mall, Government of Pakistan 

Employees Old Age Benefits Institutions (EOBI) Scheme titled “Revamping of EOBI’s Applications and Databases for Strengthening Social Security Systems approved. 

Project with foreign assistance under Finance Division “Women Inclusive Finance ‘approved by the CDWP. 

13th Five Year Plan (2024-29) 

The formulation of the 13th Five Years Plan signifies a pivotal moment in commitment to fostering a society characterized by equity, justice, and inclusivity. This introduction serves as a compass guiding through the interconnected domains of Human Rights, Special Education, Training & Rehabilitation, Senior Citizen, Child Welfare & Development, Child Protection, and Transgender issues within the broader framework of social welfare. Recognizing the profound impact these facets have on the fabric of society, this plan aims to create a roadmap for transformative change that uplifts the most vulnerable among us.

Acknowledging the interconnection between social welfare and human rights, embrace the understanding that a society’s true measure of progress lies in its ability to safeguard the rights and dignity of every individual. Human rights serve as the cornerstone, intertwining with each aspect outlined in the 13th Five Years Plan. The plan embodies a commitment to address the diverse needs of different demographic groups, recognizing that the strength of social fabric is contingent upon the ability to lift every voice and cater to the unique challenges faced by various segments of population. 

Emphasizing the profound impact that social welfare initiatives can have on upholding and promoting human rights. Through targeted interventions in Special Education, Training & Rehabilitation, and initiatives for Senior Citizen, Child Welfare & Development, Child Protection, and Transgender rights, envision a society where the pursuit of well-being is synonymous with the realization of fundamental rights. This plan represents not only a commitment to addressing immediate needs but also a visionary approach to laying the foundations for a more compassionate, just, and inclusive society. 

Pakistan’s social protection system exhibits distinctive features compared to regional peers and global counterparts. While facing resource constraints and governance challenges, Pakistan’s targeted approach through programs and organizations like BISP, NPGP, PBM, PPAF and TVO addresses specific vulnerabilities and promotes inclusive growth. Leveraging lessons from neighboring countries like India, Afghanistan, Bangladesh, Sri Lanka, Bhutan, Nepal, as well as global best practices, Pakistan can strive towards a more comprehensive and equitable social protection framework, ensuring the well-being and dignity of all citizens in the region and beyond. Turn around conference was organised ON 28TH June 2022 by the Planning Commission which diagnosed under the theme “ Putting people first- Developing Human and Social capital” many issues and some have been reflected under the social issues. 

Sectoral Issues and challenges: 

• Limited awareness, coverage and access to social welfare programs in the country. 
• Gender-based disparities impacting women’s empowerment and development 
• Socio-cultural barriers affecting the implementation of child welfare and development initiatives.  
• Lack of inclusive policies for the senior citizens, transgender, and persons with disabilities. 
•  National Policy Framework for Poverty Alleviation and Social Protection  
• Lack of research in the area of social welfare, special education, child protection and women related emerging issues.  
• Standardization, ranking and categorization of special education and social services institutions, departments and organizations etc  
• Non-availability of data in areas of special education, elderly, and transgender etc.  
• Social welfare coordination among institutions and stakeholders.  
• Lack of funding and grant facilities for non-government organizations working in far flung, unattended and underserved poorest areas of the country.  
• Uniform Education, Trainings and Rehabilitation of Special Children standard across Pakistan 
• Care, treatment and look after of Older Persons and persons with disabilities at home by the attendants.  
• Women Security, Protection and Free Mobility  
• Unemployment  
• Lack of Women Entrepreneurship opportunities, participation and access to resources.  
• Hostel and day care facilities for working women at the workplace. 

Objectives  

• The basic necessities of poor and needy people have remained unaddressed social problems across the country. The federal and provincial governments have initiated many programs to meet the requirements of the people but still there are unattended needs of the masses to be attended under social welfare services. In view the emerging situation of the social problems ,objectives and targets of the plan have been envisaged to provide access to basic necessities of education, health, income generation, entrepreneurship opportunities , social services medical services, day care facilities for children’s of working mothers treatment and protection of elderly, reductions of human rights violations, initiatives for religious pluralism & interfaith harmony, insure child rights, research & development on social problems, training and skills, technology and other public welfare services and resource mobilization through Government, public private partnerships and national & international nongovernmental organizations (NGOs). 
• Plan envisages materialization of the objectives under specific sectoral priorities, which included: 
  • Social welfare – inclusion of vulnerable groups/segments 
  • Social protection and social safety nets 
  • Corporate Social Responsibility coverage enhance under policy and frame initiatives 
  • Gender and women empowerment 
  • Child rights, welfare and protection  
  • Education, training and rehabilitation of persons with disabilities 
  • Reduction of human rights violations  
  • Social protection framework for older people  
  • Religious pluralism and interfaith harmony 
  • Protection of communities in natural disaster prone and conflicted areas 
  • Welfare services for government employees 
  • Promotion of social entrepreneurship  
  • Empowerment of rural women  
• The overall objectives of social welfare further strengthened by focusing on following main strategic interventions for the plan period including Social protection, Social mitigation and Social inclusion.  
• These interventions focus the welfare, empowerment and rehabilitation of the poor and vulnerable segment of society through new initiatives as per emerging needs and expansion of existing social welfare services to target beneficiaries of the federal &of provinces and provide them access to basic necessities required in areas of social welfare sector.

Targets 

Social protection and social safety net 

The incidence of poverty shows declines during the last 5 years and thereafter in 2017-18 to 33.3% but the current rising inflation, price in energy and oil etc. seem to increase the number of poor and vulnerable as about 40%. The highest rates of poverty are found in rural areas as 60% of Pakistan’s vulnerable are found there. However, urban poverty is also significant in its intensity, particularly in large cities and secondary towns. A broad based well-coordinated Social Protection System in the Country from social assistance to rehabilitation of the poor and vulnerable is required for fighting against poverty and promotion of welfare services. The social protection target focused on: 

Strengthen institutional alignments and organizational structure of social protection i.e. BISP, EOBI, Pakistan Bait-ul-mal, social welfare institutions etc. 

Expand/ informal sector’s pension and social welfare schemes for labor markets 

Update and complete information and data of:  

• Target population of vulnerable, marginalized and excluded children, women, youth and senior citizen  
• Registry system for social protection  
• Information of registered NGOs and their field of operation in order to access the volume of their contribution  
• Education, training and rehabilitation of persons with disabilities. 
• Empowerment of the women: The Gender Gap index is aimed to improve its position by 5 places through targeting women literacy, awareness, inclusion of women in the labor market, and health departments’ targeted strategies.  
• Improving and strengthening the pension system, particularly in informal sector and social insurance schemes  
• Intervention to protect women rights and children – introduction of comprehensive child centered nutritional programs, and public health interventions.  
• Eradication of forced and bonded labor  
• Policy for abandoned and unnamed children  
• Enhance and strengthen the following social protection programme and initiatives: 
• Benazir Income Support Program (BISP)  National Socio-Economic Registry (NSER)  
• Unconditional Cash Transfer (UCT) Program  
• Conditional Cash Transfer (CCT) Programs  
• Pakistan Baitul Maal (PBM) adopts a cross-cutting approach to contribute towards poverty alleviation, emphasizing the implementation of the following policy interventions in the next five years. 

Individual Financial Assistance 

• Under IFA (medical), 40,000 patients will receive treatment.  
• Under IFA (education), 21,995 students will be given stipends. 
• Under IFA (General) 27,045 beneficiaries will be given financial assistance 
• Under Special Friends, Persons with Disabilities Initiative, 12,220 PWDs will be given financial assistance  
• Provision of sewing machines to 9120 number of orphan girls, widows, poor destitute women, disabled and infirm for their economic empowerment. 

Cochlear Implant 

Over the course of the next five years, cochlear implant surgeries will be administered to 2400 children 

School for Rehabilitation of Child Labor (SRCL)

 -19,410 street children will be given education up to primary level. 

Women Empowerment Centers 

550 female trainees shall be given training in cutting, drafting, tailoring, hand embroidery, machine embroidery, basic & advanced computer courses, beautician course, tie & dye and fabric painting and hand knitting for earning their livelihood. 

Sehat Tahafuz Program (STP), Poverty Alleviation and Social Safety 

Sehat Tahafuz Program is one of its kind and the first shock-oriented program of the country providing health coverage against catastrophic health expenditures to extreme poor / vulnerable communities. The Tahafuz program is in line with United Nations Sustainable Development Goal 1: No Poverty, Goal 3: Good Health and Well Being and Goal 10: Reduce Inequalities. Tahafuz is providing social protection & safety nets which cater catastrophic health shocks for the poorest of the poor in the society based on NSER surveys maintained under BISP. 

Sehat Tahafuz Program has empaneled 19 Service Providers (Hospitals) at Federal, Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, GB and AJK. However, STP is in the process to empanel inter-alia, further 26 potential hospitals as per the guidelines of M/o PD&SI among poor districts of Pakistan as per Multidimensional Poverty Index (MPI). 

Proposed Allocation for next five years: 

Social welfare interventions:  

• Facilitating women at work places through institutional and policy arrangement i.e., day care centers, maternity and paternity leave and flexible working hours etc. 
• Formulation of social protection framework for older people.  
• Promotion of religious harmony and religious tourism for peaceful society.  
• Eradication of drug usage among youth.  
• Accessibility of Girls in public spaces / recreational spaces and parks.  
• Institutional arrangement for protection of child rights and protection.  
• Welfare initiatives for transgender and religious minorities.  
• Inclusive education considering the values of all religious minorities  
• Providing timely support to disaster prone and politically conflicted areas  
• Controlling homicide to 5% (it is 7.8%-year 2014-15) and improving mental health. 
• Controlling violence and reducing up to 22% (it is 32.2% 2014-15)  
• Promote cultural tourism for seeking benefits from the CPEC interventions. 

Social Inclusion  

• The vulnerable and poor segments of the society generally leave behind in the development process and are required to be added in each field of economy for their socio-economic uplift and reducing their miseries. The target group will be included poor, elderly, women, children, transgender and persons with disabilities. 

Policy Interventions 

The policies are required to be reviewed and a new framework to be prepared for protection of rights of the needy and vulnerable people. Among these following areas are planned and required initiatives during plan period: 

• Review and revision of existing Social Welfare Policy/strategy or Preparation of National Framework.  
• Review of national gender policy framework in light of the emerging needs.  
• Framework for maintaining equitable standard of education, training and rehabilitation of persons with disabilities in the country.  
• Revision of national policy for persons with disabilities (2002)  
• Formulation of national social protection framework for older people. 
• National social protection framework and policy for home base workers.  
• National Framework on disability.  
• Formulation of framework for public private partnership in social welfare sector  
• National policy framework for enhancing social services to the poorly attended areas of the country for the NGO’s.  
• Review and alignment of the provincial policies for persons with disabilities.  
• Review and preparation of the uniform curriculum for Special Children.  
• Review and improve National indicators for women’s improvement and development  
• Improve Global Gender Index with regard to Pakistan  
• Implementation of National Gender Policy Framework

Implementation Framework/ matric

8.1 Governance and Institutional Reforms 

Good governance is characterized by traits such as transparency, accountability, adherence to the rule of law, stakeholders participation, and responsiveness to their needs. The objective of good governance is to create a framework that promotes integrity, fairness, and efficiency in management which ultimately contribute to overall success and sustainability of socio-economic development. 

The responsibility of the State is to provide and establish a conducive political, legal, and economic environment to nurture individual capabilities, promote private initiatives and sustainable economic development. Effective political and administrative institutions, coupled with a robust civil society, are imperative for promotion of democratic governance. Hence, institutions facilitate people’s active participation in economic, social, and political activities. 

The governance reform agenda of the government lays special emphasis on institutional strengthening, market fostering, inclusive and sustainable development, participatory approach in policy/ decision making process, civil service reforms, effective delivery of public services, performance management, business process re-engineering including digitization and transparent governance, strengthening criminal justice systems & procedures, domestic resource mobilization, financial management, procurement, legal and intellectual property rights enforcement, and reforming public sector enterprises. 

Review of Initiatives launched during last decade 

The government in place has launched several initiatives aligning with the priorities established over the past decade. In the World Bank’s Governance Indicators report 2022, Pakistan’s governance indicators are not very encouraging as compared to regional countries despite the fact that a number of initiatives were undertaken by the government to improve governance in the country. Comparative analysis of Pakistan’s governance indicators with other regional countries shows that Pakistan scores below all other South Asian peers against these indicators which require more focus to strengthen the local governments system; ensuring political stability, strengthening institutions responsible for national security to improve Rules of law for sustainable socio-economic development. The data on governance indicators is as under:

Table 18: Comparative Analysis of Pakistan’s Governance Indicators with Regional
Countries 

Challenges 

Despite the efforts made so far, Pakistan is still facing several governance challenges that impact its ability to achieve sustainable development by addressing emerging needs of its growing population marked by youth bulge. The following governance challenges still persist:  

• Accountable and Transparent system across the levels of the state apparatus, particularly in areas directly engaging with public  
• Equal distribution of resources among provinces and districts in the country  
• Effective delivery of public services among a substantial portion of the population needs such as food, water, education, health, and shelter as per constitutional provisions  
• Effective Performance Management system to develop connection between policy intents, implementation and actual development outcomes  
• Rule of Law for each citizen with affordable, timely and speedy justice system  
• Effective Coordination mechanism between federation and federating units on development challenges impeding smooth and sustainable socio-economic development  
• Effective Local Government for efficient governance and provision of public service delivery at grassroots level  
• Strengthen institutions to minimize Systematic Corruption across various sectors especially Public Sector Enterprises (PSEs)  
• Regulatory systems that reduce environmental deterioration at both urban and rural areas physical infrastructure

Objectives for 13th Five Year Plan (2024-2029) 

Development discourse for next five years necessitates a robust governance framework not only to address complex and emerging governance issues and challenges but also provide a system that facilitates sustainable socio-economic development and alleviates poverty. The following objectives will be pursued during the13th Five Year Plan to lay the foundation for developing an ambitious framework of Governance Reform and Institutional Development:

• Enhancing delivery of public services, especially critical municipal services, by strengthening local government system to ensure effective delivery of essential services  
• Promoting inclusive and sustainable development in design and implementation of policies to address regional disparities through funding from PSDP/ADPs.  
• Strengthening rule of law by enhancing effectiveness of legal and judicial system with timely dispensation of justice  
• Encouraging citizen participation by promoting transparency and accountability in governance processes  
• Effective economic governance by streamlining regulatory frameworks with ease of doing business regime  
• Effective Public Financial Management and taxation systems including domestic resource mobilization and management to ensure fiscal stability for fostering economic growth  
• Institutional capacity building by undertaking civil service reforms to modernize and streamline administrative processes to improve service delivery  
• Optimizing technology integration for better governance with robust cybersecurity measures  
• Strengthening and enhancing the role and capacity of Parliamentary fora including the Senate, National Assembly and Provincial Assemblies and their committees to ensure democratic governance  
• Providing efficient governance of urban spaces to better manage urban governance issues  
• Developing and stabilizing efficient, sustainable, decentralized governance systems at all levels to foster markets, facilitate and create opportunities for individuals and private sector to invest and flourish businesses  
• Improving innovation systems to enhance creativity, productivity and quality in the country  
• Enhancing institutional collaborations to promote best practices  
• Strengthening crisis management and resilient system by developing effective strategies for natural disasters and public emergencies 

Strategy 

The governance agenda for the 13th Five Year Plan has been aligned with the Constitutional obligations as mentioned in Part-II (Article 8 to 40) (Chapter:1-Fundamental Rights and Chapter: II-Principles of Policy) of the Constitution of Islamic Republic of Pakistan. The proposed reform agenda will not only improve governance indicators but also facilitate implementation of other sectoral initiatives proposed for the Plan period. The strategic thrust of good governance will cover following distinct dimensions for effective service delivery:

Strengthening Local Government System 

Local Governments are the third tier of governance structure of Pakistan. Article 140A of the constitution mandates that “(1) Each Province shall, by law, establish a local government system and devolve political, administrative and financial responsibility and authority to the elected representatives of the local governments.” Representative, effective and autonomous local governments being closest to the people are the bedrock of well functioning governance system as it resolves local issues at gross root level. 

During the Plan period, the local government system will be strengthened by fostering inclusive governance, empowering communities, and ensuring efficient service delivery at grassroots level. The existing local government laws will be revisited to ensure timely local government elections and devolving more authority to the local governments for addressing community-specific needs and priorities effectively. The capacity of local councils will be enhanced for their improved performance through community involvement and decentralized financial empowerment to generate and manage their own resources to fund local initiatives that directly impact common man lives of their constituents. Public procurements will be made alignment with PPRA rules and the Auditor General of Pakistan will ensure timely audit of local governments accounts for effective accountability. Monitoring, evaluation and risk management systems will be established for effective utilization of public expenditure. Collaboration and partnerships with civil society and private sector will be pursued in decision making process and policy implementation. The following will be pursued to further strengthen local governments:  

• Continuity of the local government system with assessment of its loopholes and improvements instead of repeated experimentations.  
• Institutionalizing Provincial Finance Commission (PFC) in consultation with provinces to be aligned with National Finance Commission 
• Diverting need-based resource allocation to incentive-based allocation e.g., matching grants for local governments under PFC.  
• Wealth maximizing/revenue generating activities by using local resources e.g., land, public spaces along with revenue raising through various fees and taxes.  
• Introduction of Performance Indicator system to measure efficiency and effectiveness of service delivery versus output, costs, revenues, and quality  
• Clear jurisdiction of the local government will be determined to minimize influence from legislators  
• Strengthening capacity of the local administration including local representatives through mandatory training for effective provision of local services, revenue generation and promoting local businesses environment. 

Paradigm Shift – Participatory Approach 

Under the 18th Constitutional amendment and NFC award, more autonomy and resources were devolved to the provinces.. To develop and implement socio-economic policies for the betterment of citizens, a participatory approach and effective coordination among federating units are essential. A mechanism for promoting participatory approach will be developed to ensure the participation of all stakeholders in development processes.

Encouraging coordinated and synergized projects within the development programme across different institutions will promote collaboration and workability among departments. To enhance quality and timely completion of PSDP funded projects, project appraisal workshop will be introduced by engaging key stakeholders. Effective public information communication strategy will be adopted to seek inputs and build ownership of the stakeholders on government policies and initiatives. Advisory Committees will be established in each Ministry/ Division/ Department and District/Local Level to advise in design and implementation of development agenda. Collaboration between policymakers, academia and other stakeholders will be pursued for fostering academic excellence, producing skilled graduates, and contributing to the country’s socio-economic development. 

Fostering Peaceful and Inclusive Societies – Access to Justice and Rule of Law 

Sustainable Development Goal (SDG) 16 promotes peaceful and inclusive societies, sustainable development, access to justice, and effective, accountable, and inclusive institutions. During the plan period, initiatives will focus on reducing violence, protecting vulnerable groups, promoting the rule of law, and ensuring equal justice and inclusive decision-making. 

Recognizing the judiciary’s critical role in democracy and development, funds will enhance the capacity of the police and judicial systems, aiming to restore the rule of law and improve public trust through effective justice delivery. Improving the criminal justice administration is essential for counter-terrorism efforts, with emphasis on law enforcement agencies like the police, FIA, NAB, and public defenders, especially in forensic evidence collection. 

The Law and Justice Commission of Pakistan (LJCP) will coordinate institutional reforms in the justice sector, with support from the National Judicial Policy Making Committee (NJPMC). Court digitization will be strengthened following National Judicial Automation Committee (NJAC) recommendations, implemented by the National Judicial Automation Unit (NJAU). AI integration into legal processes will enhance justice sector efficiency. 

The Ministry of Law and Justice will enhance the capacity of its Legal Wings and central law officers, and all Mohtasibs, including Wafaqi, Tax, and Women Mohtasib, will be strengthened with upgraded online complaint hearing systems. Recommendations from the National Committee on Prisons Reforms will improve prison conditions. 

Community-focused policing will be ensured through merit-based recruitment and postings. Obsolete laws will be updated according to international best practices, and criminal databases will be established in coordination with NADRA, integrating national and provincial data. The National Action Plan and National Security Policy will guide the establishment of effective rule of law. Legally sanctioned Alternate Dispute Resolution mechanisms will engage community leaders to reduce the judicial system’s burden 

Public Financial Management (PFM) :

Public Financial Management (PFM) is crucial for enhancing fiscal discipline, public service delivery, and economic development by ensuring the effective use of public resources, including foreign aid and domestic revenue. The PFM Act of 2019 and the 2021 Financial Management and Powers of Principal Accounting Officers Regulations have introduced Chief Finance & Accounts Officers in all ministries and established Chief Internal Auditors to strengthen internal controls. The focus will be on implementing the PFM Act effectively aligning public financial management with international standards, and conducting audits by the Auditor General of Pakistan. 

Key initiatives include:  

• Implementing Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) laws to combat white-collar crimes.  
• Reforming the financial management system, especially in accounting, reporting, and government payments.  
• Introducing the Green Channel Facility, Micro Payment Gateway, digital submission of bills, and processing salaries and pensions through SAP.  
• Transitioning from cash basis to accrual basis accounting.  
• Enhancing the roles of Public Account Committees and Parliamentary Standing Committees to improve oversight and accountability.  
• Capacity development of financial management institutions like the Controller General of Accounts and Auditor General of Pakistan will be prioritized. Additionally, contributory pension reforms, modeled after those in Khyber Pakhtunkhwa and Punjab, will be considered to reduce federal expenditure. Regular reviews and updates of financial management procedures will be institutionalized to ensure continuous improvement and effectiveness. 

Tax Administration 

To enhance the Tax-to-GDP ratio and address issues in the tax system, the Federal Board of Revenue (FBR) will be reformed to increase revenues sustainably, broaden the tax base, simplify regulations, and reduce cross-border trade barriers. Initiatives include creating a central database of potential taxpayers using data from NADRA, telecom companies, banks, educational institutions, and development authorities. The tax base will be expanded by removing discretionary exemptions, simplifying rules, enhancing transparency through the Integrity Management Unit, and automating processes. High-quality tax facilitation services will be provided while strengthening the FBR and provincial tax departments. 

Technological advancements such as SWAPS (Synchronized Withholding Tax Administration & Payment System), third-party data integration, and artificial intelligence will improve tax collection efficiency and reduce compliance costs. New systems like Track and Trace, Point-of-Sale Integration in retail, and Digital Invoicing will digitize less-documented supply chain sectors. Restructuring Regional Tax Offices (RTOs) will focus on broadening the tax base and digitization. Collaboration with provincial tax departments will harmonize tax reforms, integrate taxpayer processes, and share data to improve revenue collection and reduce compliance costs. 

Regulatory reforms at the Board of Investment will aim to improve the business environment and promote exports. The Federal Tax Ombudsman (FTO) will be strengthened with better infrastructure, IT systems, and human resources. The legacy system will transition to a modern framework to optimize efficiency, transparency, and accountability in tax administration. Digitalizing complaint documents, developing a Document Retrieval System, and implementing an Electronic Case Management System accessible via a dedicated portal will be prioritized. These measures align with the 5Es framework to promote e-governance and encourage citizen participation, ensuring easy access to affordable justice against tax system maladministration. 

Enhancing Capacity and Transforming Public Sector 

Public sector capacity will be enhanced by inducting skilled, accessible, and motivated civil servants at federal, provincial, and local levels, guided by the recommendations of the Prime Minister’s Task Forces on Civil Services and Government Restructuring. The focus will be on inducting professionals into relevant cadres and groups, with training regimes reviewed based on comprehensive needs assessments. To attract and retain top talent, public servants’ remuneration will be aligned with competitive market-based salaries. A Performance Management System, including annual performance agreements at ministerial, departmental, and individual levels, will be implemented to foster accountability and ensure departmental functions align with job descriptions and quantifiable KPIs. Efforts will also revive the PM Committee for performance contract evaluation through periodic ministerial reviews, incentivizing performance scores. Training institutions like the Pakistan Planning and Management Institute (PPMI) will be strengthened, and post-induction, inservice, and on-the-job training will be provided to all civil servants, with career progression linked to performance. 

For corporate governance in Public Sector Enterprises (PSEs), effective implementation of the State-Owned Enterprises (Governance and Operations) Act, 2023, and the State-Owned Enterprises (Ownership and Management) Policy, 2023, will be ensured. A comprehensive review of the entire government structure will address emerging national and international challenges while optimizing public service delivery efficiently and cost-effectively. Efforts will be made to outsource maximum services of public sector organizations, limiting the public sector’s role to regulation. Workload reassessments will be carried out at every level for optimal redistribution of financial and human resources. The rules governing government employees’ performance will be reviewed to rationalize discretionary powers, and the role of Principal Accounting Officers (PAOs) will be strengthened in alignment with Public Financial Management Law. To streamline and modernize the public sector, organizational functions will be reviewed, and redundant organizations abolished. Smart, innovative governance will be introduced to ensure open, transparent, and merit-based processes. 

A strategic thrust for transformative governance aims to advance reforms within the institutional landscape during the plan period, reshaping institutional efficacy and governance regimes. This will include a series of strategic policies and initiatives to modernize, digitize, and optimize the functioning of the public sector. Efforts will be made to overhaul the Performance Evaluation Reporting (PER) system, including 360-degree appraisals, digitize inter-governmental communication, restructure to foster expertise driven governance, and ensure a transparent, merit-based civil servant transfer system. Key initiatives include transforming Pakistan Railways, restructuring PIA through outsourcing management, privatizing road and motorway governance, developing and privatizing water channels, privatizing urban public transport, streamlining the national traffic challan system, optimizing the Islamabad Safe City Project, establishing institutional setups for freshwater fish export, maximizing earnings from Afghan visit visa fees, and promoting afforestation through the private sector.

Strengthening Role of Legislators 

In response to evolving governance challenges, the role of legislators in evidence-based decision-making and oversight processes at all levels will be enhanced. Special focus will be given to developing the leadership skills of parliamentarians, particularly women. Support for specialized research in committee areas dealing with strategic policies on provincial, national, and international issues will be facilitated. To further these goals, institutions providing parliamentary services will be strengthened through additional resources aimed at enhancing the capacity of parliamentarians. Effective public awareness campaigns regarding the role and responsibilities of the Parliament and its members will contribute to the strengthening of democratic processes. Additionally, electoral reforms will be introduced to fortify the electoral system, including setting a quorum limit for legislative forums at 50% of the total strength of the respective house. 

A comprehensive strategy will be devised to strengthen both the role of legislators and the legal/regulatory framework. This strategy will emphasize the provision of parliamentary services, highlighting the importance of institutional support for lawmakers. Key recommendations include continuous training for parliamentary staff, enhanced research capabilities, and maintaining a technologically advanced parliamentary library. The integration of modern technology, such as digital document management systems, will be encouraged to streamline processes and improve transparency. Outreach programs for public engagement, support for parliamentary committees, and the promotion of transparency and accountability within parliamentary services will also be integral to the plan. 

On the legal and regulatory front, the plan will focus on frameworks to safeguard public interests through various initiatives. These include implementing open government initiatives, whistleblower protection laws, and Regulatory Impact Assessments (RIA) to evaluate the potential impact of proposed regulations on public interests. Stakeholder engagement through public consultations, strengthened legislative oversight, and enforcement of anti-corruption measures will be key components. Emphasis will also be placed on maintaining ethical standards, merit-based hiring, and periodic reviews of existing regulations with sunset clauses. Strengthening the legal and regulatory framework through parliamentary services will be emphasized, requiring a collaborative approach involving legislators, parliamentary staff, civil society organizations, legal experts, and other stakeholders. The commitment to transparency, accountability, and the public interest throughout the legislative process is identified as paramount for the success of the proposed initiatives. 

High Quality of Statistical Data 

Enhancing effective utilization of technology with improved availability, quality, and accessibility of data is critical for addressing planning and monitoring requirements. A systematic approach will be employed to address key gaps in economic and social statistics including enhancing quality and coverage of MIS, national accounts, poverty estimation, monitoring and analysis of data. Measures will be undertaken to enhance dissemination of data and information at federal, provincial, ministerial, and institutional levels. A system to issue Quarterly GDPs data and Automated Inflation measurement support system will be established. A National Data Center will manage both current and historical datasets to meet future needs. Integration of data including local government vital events, health, education and other socio-economic indicators with NADRA will be pursued for forecasting organizational demands and effective decision making. Digital maps based on integrated datasets will be generated following the National Spatial Data Infrastructure (NSDI) model to utilize potential sources of earning. All relevant departments will publish current and historical data on their websites to facilitate accessibility for researchers and policymakers. PBS will initiate new projects for collection of requisite data to address the data gap. These initiatives will to fulfill SDGs data requirements and will improve planning and monitoring capabilities of policy makers. 

National Database and Registration Authority (NADRA) being the torch bearer in introducing new technologies in the field of Registration and compiling of National Database shall continue to strive ahead connecting private and public databases across Pakistan. Analyzing new data points, registering vital life events, real-time processing of Citizen Identity documentation through online application deployment and ensuring scalable solutions for rapid deployment shall be core targets. NADRA shall endeavor further to contribute in delivering good governance through improved identity management, system and data integration. NADRA shall be an active contributor in developing systems with a corroborative approach to channelize cross field consolidation through exploring capital markets, labor and skill development, planning and housing, societal inclusion, and health sector digitization. 

Smart Governance Initiatives 

Smart Governance is pivotal to ensure good governance as it enhances efficiency and effectiveness of the public sector in decision-making processes. Cost-effective measures will be initiated to engage citizens and provide a user-friendly interface between public and government. Open and smart governance practices across all public departments including Public Sector Enterprises (PSEs) will be adopted to enhance transparency in decision making and service delivery. For Electronic-Governance a reliable Information Communication Technologies (ICT) infrastructure will be established by using ICT-based systems to promote efficiency, transparency and accountability in service delivery and decision- making. Ministries/Divisions/Departments will be encouraged to strengthen their IT infrastructure and facilitate IT training programs. A comprehensive e-filing system and innovation governance for the public sector will further streamline administrative processes and enhance accessibility of citizens to public service delivery. To ensure transparency and openness, existing rules/ regulations/laws governing public sector organizations and service delivery will be placed on websites and will be aligned with smart governance initiatives. 

Institutional Reforms Cell (IRC) has been mandated to undertake a comprehensive exercise for right sizing of Government to ensure productive and allocative efficiency. All Ministries and Divisions have been engaged on draft SRO to introduce institutional / organizational reforms. Redundant organizations and rules will be reviewed. The IRC, being an office passing through transitional phase, will undertake reorganization of Federal Government, civil service reforms, restructuring of key public organizations and business processes reengineering in coordination with Ministries/Divisions/Cabinet Committees in next three years. 

Anti-Corruption Initiatives and Procurement Reforms 

Accountability is a cornerstone of good governance, crucial for minimizing systemic corruption prevalent across all sectors of the economy, including business and development activities. Efforts will focus on strengthening accountability institutions such as the National Accountability Bureau (NAB), the Auditor General’s Office, the Federal Investigation Agency (FIA), and other federal and provincial entities, including Anti-Corruption Departments. These institutions will be enhanced through training, career progression, financial incentives, and administrative autonomy. Accessible whistleblowing policies and customized procedures will be established to combat corruption, supported by a comprehensive legal framework tailored for each state organ. 

Legislation will empower authorities like NAB to obtain necessary information from other government or semi-government departments. The investigation of white-collar crimes will adopt a multidimensional approach, including account scrutiny, IT handling, revenue records examination, cyber forensics, and ledger maintenance. Specialized training for investigating officers and judges will be implemented, focusing on white-collar crimes and accountability courts. Accountability institutions will gain more financial and administrative autonomy, and a central database management system interlinked through NADRA will be introduced across all government departments for quick and accurate decision-making. 

The FIA will play a significant role in restoring the rule of law and ensuring access to justice, undertaking initiatives for capacity building of police and the judicial system, and combating white-collar crimes, cybercrimes, and terror financing. A comprehensive national anticorruption strategy will be developed, featuring a compliance management framework and increased prosecution capacity. Policy-level interventions will include developing an internal accountability mechanism, defining key performance indicators (KPIs) for FIA functional units, linking staff performance to case outcomes, and training staff for investigating money laundering cases. Departments will define service standards to ensure timely public service provision with built-in grievance redressal mechanisms. The Right to Information Act will be reviewed to enhance citizen access. 

The prosecution capacity will be enhanced to handle complex white-collar crimes, banking and internet frauds, cyber offenses, money laundering, and terrorist financing. A multifaceted approach will be adopted to combat corruption, improve governance, and create an environment of transparency and accountability. Procurement reforms, including the introduction of e-procurement, will be implemented to enhance transparency, reduce transaction costs, improve contract management, and minimize errors, fraud, and corruption. Existing procurement rules will be reviewed and simplified to make the process more transparent, efficient, and cost-effective. 

Enhancing Development Effectiveness 

A comprehensive strategy will be formulated to ensure the effective implementation and utilization of public spending, including the Public Sector Development Programme (PSDP), while focusing on capacity building for institutional development within agencies involved in development processes. This will involve enhancing the capabilities of entities such as the Planning Commission and Provincial Planning and Development Boards/Departments. To streamline development processes, a National Development framework and project appraisal workshop will be introduced to enhance project design, implementation framework, monitoring, and evaluation. Projects financed from the PSDP and Annual Development Programme (ADP) will align with the National Development Framework/Plan/policy targets, ensuring efficient resource allocation. 

Collaboration through Public-Private Partnership (PPP) mode of funding in infrastructure and social sector projects will be encouraged, with efforts to strengthen PPP Authorities and revisit rules on PPP at the federal level to enhance the ease of doing business. The manual for Development Projects will be updated as per the emerging requirements of the development sector, and the National Economic Council (NEC) will publish an annual performance report. Parliamentary oversight through Standing Committees will be enhanced to review the Plan and implementation relating to overall policies, strategies, and key result areas, making recommendations for action. 

Quality of development projects at the design stage will be prioritized through need assessments, feasibility studies, and incorporation of lessons learned and best practices. Mechanisms for project monitoring, evaluation, and risk management will be strengthened to ensure effective utilization of public investment. Monitoring and evaluation frameworks will be integrated into programme/project documents, enhancing objectivity and development effectiveness. Efforts will be made to strengthen policy-making and implementation processes with legal backing. 

Under the 4RF and 5Es Policy Frameworks, technology-led transparent development will be emphasized through systems such as the Intelligent Project Automation System (IPAS), Project Monitoring and Evaluation System (PMES), and the PSDP Portal. Facilitation will be provided during the preparation and design stages of development projects, and incentivebased appointments of project directors and staff on merit will be implemented. PSDP investment will be aligned with Plan targets, and strategically aligned projects will be approved and included. Integration of technology for streamlined development processes, social and environmental sustainability, and effective communication strategies will be emphasized to ensure the efficient utilization of public investment 

Legal and Regulatory Framework 

A robust legal and regulatory framework is crucial for an evolving market economy foster openness, transparency, and encourage sustainable economic growth. A progressive regulatory and legal policy framework influences effective implementation of government policies in achieving its targets. Laws and regulations directly impact economic development, and quality of justice. Therefore, a regulatory framework promoting business, innovation, and competitiveness is imperative. Pakistan Regulatory Modernization Initiative (PRMI) has been launched to reduce compliance burden of businesses and improve effectiveness of the regulatory regime in the country and to combat institutional uncertainty and promote economic growth. The role of an effective judicial system would be critical for ensuring predictability in economic transactions and for their long term planning. Judicial independence will guarantee enforcement of contracts, fair, consistent and uniform application of rule of law to economic life to avert bureaucratic arbitrariness. 

During the Plan period, the legal and regulatory regime will be strengthened to protect public properties and interests through formulation and application of the rules and regulations, strengthening of institutions integrity, separation of institutional power, consistent and coordinated regulations, transparency, predictability of policies and rule of law. Efforts will be made to provide a business friendly environment specially to promote the private sector as an engine of growth by implementing legislative reforms pending on the issue. One-Stop Shop solutions will be further strengthened to promote ease of doing businesses. A comprehensive and integrated legal and regulatory framework including financial institutions, trade facilitation, revenue mobilization, fair competition, food, water and energy security, intellectual property, grievance redressal and consumer protection will be formulated. The regulatory institutions will be further strengthened with administrative and financial autonomy. Public awareness of legal and regulatory framework will be enhanced through a media campaign for better understanding of the general public/ businessman on legal and regulatory framework. 

State Bank of Pakistan (SBP) intends strategic transformation for economic growth while maintaining monetary stability. The SBP’s strategic plan outlined in its Vision 2028, built on five strategic themes for shaping the future of banking and economy amidst global and domestic challenges. Enduring statutory responsibilities, spanning payments systems, banking sector supervision and currency management will remain integral parts to ensure smooth functioning of the economy. Concerted efforts will be made to diversify existing bank-centric financial systems to meet the country’s future financing needs. Transformation will be aligned with the Financial Inclusion Strategy designed to achieve universal financial inclusion by addressing documentation issues of the economy. To ensure a robust and efficient financial ecosystem, the SBP will actively pursue establishing institutional mechanisms for alternate dispute resolution within the banking sector. Recognizing the vulnerabilities in the financial sector, the SBP will proactively implement policy measures to address the impact of climate change. Emerging technologies will be adopted to enhance efficiency and promote financial inclusion and equality governance within organization and among regulated financial institutions. 

Competition Commission of Pakistan is committed to foster a culture of competition in commercial and economic activities, prioritizing economic efficiency and protecting consumers from anti-competitive practices in accordance with the provisions of Competition Act, 2010. A comprehensive approach will be adopted to further strengthen the Commission with necessary tools to enforce laws across diverse economic sectors. Proactive enforcement through the new Market Intelligence Unit (MIU) will be adopted to create advanced technological and data analytical capabilities while assessing market data to identify the collusive practices. 

The policy interventions during the plan period will emphasize principles of promoting competition and ensuring fair business practices in the country. Under competition enforcement, investigating and prosecuting anti-competitive practices, monitoring mergers, and prosecuting abuse by entities with significant market power will be pursued. Consumer protection efforts will involve enforcing laws against deceptive practices, educating consumers, and collaborating on advertising guidelines. Market studies will be conducted which can lead in development of a National Competition Policy and engage in advocacy for pro-competition policies. Review of regulatory framework and introduction of regulatory reforms will be initiated. Efforts will be made to evaluate the impact of regulation on competition for ensuring a level playing field for businesses. Sector-specific policies tailored to industries, addressing data protection and privacy concerns, and promoting capacity building and education will also be emphasized. International cooperation with global competition authorities, monitoring and evaluating policy impacts, and promoting innovation will be essential components. The plan will emphasize flexibility and collaboration with governmental agencies, stakeholders, and the private sector for successful policy implementation in response to evolving economic conditions and emerging market challenges. 

Securities and Exchange Commission of Pakistan is dedicated to develop a modern corporate sector and vibrant capital markets in Pakistan. The primary objective is to build a sound regulatory ecosystem by bringing innovative solutions in regulated sectors serving as impetus for sustainable and inclusive economic growth. In this regard, SECP’s capital market reform agenda is focused on revamping primary market framework to encourage quality listing in a timely manner; implementing a state of the art on-boarding mechanism to expand the investor base; expanding investor education program through creation of market development fund; reviewing leverage products and bringing-in new products to enhance liquidity in the secondary market. On the Insurance side, SECP intends to launch a five-year Strategic Plan to improve regulatory framework, policyholder protection and increase insurance penetration in the country. 

To facilitate corporatization, SECP is striving to establish a one-window registration system in collaboration with federal, provincial and other state bodies. Similarly, the Companies Act, 2017 is being reviewed to align the framework with developments in the digital space, rationalize reporting requirements, and enhance transparency. In addition, internal systems are also being digitized under SECP’s Leading Efficiency through Automation Prowess (LEAP) initiative, which also includes introduction of a cyber-security framework to address vulnerabilities in the wake of increasing digitalization in the corporate and financial sectors. Further, to address the Environmental, Social and Governance (ESG) concerns, a regulatory framework is being developed for providing sustainability related disclosures and promoting gender equality across its regulated sectors. 

National Tariff Commission (NTC) will further strengthen its role for effective tariff and trade measures with a focus on enhancing domestic industry competitiveness. Efforts will be made to address trade remedy actions and reforms to rationalize tariffs. International trade matters assigned by relevant laws will be pursued by facilitating domestic exporters facing foreign investigations. World Trade Organization dispute settlement will be assisted to resolve disputes under various trade agreements. Ongoing research to ensure effective implementation of Trade Remedy Laws will be continued. National Tariff Policy (2019-2024) is being implemented with objectives to remove anomalies in tariff structure, promoting trade policy priorities, competitiveness and promotion of investment efficient indies through a predictable tariff structure. The second National Tariff Policy (2025-29) will further help industries to enhance competitiveness, substitute imports and enable them to create surpluses for exports as well. The Tariff Policy envisages to derive mid-term and long-term benefits instead of focusing on short term consideration of revenue constraints. Further, Anti-dumping Rules 2022, have been issued through Gazette Notification dated August 2023 to align the investigation of relevant cases with international best practices and producers under WTO framework. The Commission will strive to maintain its impartial and autonomous status to ensure unbiased and objective approach. 

The Public Procurement Regulatory Authority (PPRA) will focus on enhancing public procurement processes in the country. The plan includes implementation of the e- Procurement System (EPADS) at the federal level as well as in provinces and development of standardized bidding documents for different procurement categories. To ensure effective regulatory compliance and combat corrupt practices in public procurement a Regulatory Monitoring & Evaluation system will be established. The plan will include introduction of regulations for improving government management, transparency, accountability, and the quality of public procurement. In addition, disposal of public assets, mechanisms for blacklisting and debarments of bidders, and implementation of a Procurement Monitoring and Evaluation Framework through EPADS will be initiated to streamline and enhance efficiency and integrity of public procurement processes. 

Intellectual Property Organization will be strengthened to support innovation, creativity and development of knowledge base. To improve Pakistan’s global innovation index score, knowledge sharing sessions with academia and research & development organizations will be conducted. An online trademark filing system has been launched filing trademark applications. Applications related to copyright, patent, designs and geographical indications will be digitized. Existing copyright law will be improved through consultations with artists, lawyers, musicians, and representatives from other creative industries. 

Oil and Gas Regulatory Authority (OGRA) will foster competition, increase private investment and ownership in petroleum industry while protecting public interest, transparency and impartiality in decision making processes. Brownfield Refinery Policy aiming to encourage existing refineries to upgrade/modernize /expand their facilities to minimize black product such as Furnace Oil and produce environment friendly fuels as per Euro-V specifications will be implemented while addressing climate related concerns. For effective economic governance by streamlining regulatory frameworks with ease of doing business regime, OGRA is in process of reviewing/amending its existing Rules so as to make it more elaborate, comprehensive and investment friendly while addressing various issues of stakeholders. 

Pakistan Telecommunication Authority (PTA) with a vision to foster innovation and connectivity will embrace cutting-edge technologies and facilitate the deployment of next generation networks. Collaborations with industry stakeholders, government bodies, and international organizations will be made to develop and implement robust policies that address the challenges and opportunities presented by the ever-changing telecommunications environment. An enabling environment for the availability of high quality telecom services and robust infrastructure will be provided across the country to bridge the digital divide. PTA will actively promote adoption of widespread broadband through concerted efforts. PTA will also take initiatives to promote digital gender inclusion, aiming to enhance women’s access to digital technology. These efforts will provide opportunities to advance the Sustainable Development Goals (SDGs) and promote inclusive development. 

PTA will proactively pursue the introduction of 5G technology in Pakistan – a transformative leap in wireless communication that promises to reshape digital connectivity and interaction through its ultra-fast download speed, minimal latency for real-time applications, and the ability to simultaneously connect numerous devices. Collaborations with industry and other stakeholders for 5G rollout will be made. In addition, PTA is poised to revolutionize connectivity in Pakistan by leveraging satellite broadband and taking strategic measures to ensure the advancement of Wi-Fi technology in Pakistan, in harmony with global trends. 

Robust cybersecurity measures will be enforced to safeguard the integrity and privacy of digital communications. To proactively implement the “Digital Pakistan” vision, national and international collaborations will be forged to achieve the ‘Leading’ 5G regulator status under the International Telecommunication Union (ITU) ranking system. 

Pakistan Electronic Media Regulatory Authority (PEMRA) will implement Pakistan Electronic Media Regulatory Authority (Amendment) Bill, 2023 while expanding scope of public entertainment, education and information with improved administrative and disinformation control mechanisms. Regulatory framework will ensure authenticity of news especially matters pertaining to social tolerance, general development, energy and economic development. Electronic media will have a pivotal role in educating masses, building and shaping fair opinion and strengthening democratic processes. Interactive sessions for review and update code of conduct for media houses will be conducted. 

National Electric Power Regulatory Authority (NEPRA) will be further strengthened by providing autonomy in implementation of its regulatory decisions especially the Indicative Generation Capacity Expansion Plan (IGCEP), Transmission System Expansion Plan (TSEP) and Competitive Trading Bilateral Contract Market (CTBCM). The functions and framework of NEPRA will be reviewed and updated to align the same with the industry advancements, technological changes, evolving market dynamics while preserving its autonomy and enforcement of performance standards. The alignment will foster collaboration between regulatory actions and national energy objectives, promoting effective governance while upholding the autonomy of the regulator in decision-making. A robust risk management framework will be developed to identify and address the potential risks to the effective functioning of NEPRA and the implementation of its regulatory decisions. 

Pakistan Nuclear Regulatory Authority (PNRA) will keep on actively pursuing its role as an independent national nuclear regulator to achieve its mission of protection of the workers, public and the environment from harmful effects of ionizing radiation. Under four goals of Strategic Plan(2024-28), PNRA will further enhance its regulatory regime to remain aligned with international standards through development of new regulations in emerging areas along with enhancement of regulatory guidance in diverse fields for effective implementation of regulations by its licensees. PNRA will remain committed to fulfill its obligations under various international conventions signed by the GOP and will focus on continuous improvement through capacity building, action on findings of the internal self assessments and international peer reviews. PNRA will enhance incorporation of recommendations of the 5E framework in operational activities. PNRA will maintain transparency by ensuring a meaningful engagement with its stakeholders along with pursuing activities to build public trust. Confidence in PNRA by its stakeholders will be further enhanced through better interaction, utilizing various measures for ease of doing business, intensifying public awareness programs and acting on feedback received from the licensees, public, academia and the Government. 

PNRA will further strengthen coordination with administration authorities and local law enforcement agencies to expand outreach for implementing regulatory requirements in radiation facilities and for the sensitization of local management regarding their role in normal and nuclear radiological emergency situations. PNRA will engage in R&D activities in emerging areas to overcome challenges related to regulation of new nuclear and radiation technologies. PNRA will integrate R&D insights in regulatory processes and use its outcome to support regulatory decision making. At the international front, PNRA will pursue technical cooperation through bilateral engagements in the field of nuclear safety for the next five years. Efforts will be made to further polish the country’s image at multilateral platforms such as IAEA by actively providing its expert services in various activities of the agency. PNRA will contribute towards national stability and progress contributing directly and indirectly to the SDGs thereby contributing to strengthening the image of Pakistan as a responsible nuclear state. 

Targets and Investment 

With a comprehensive reform agenda as mentioned in the preceding sections, the governance indicators are expected to improve during the Plan period. In order to accomplish the reform agenda, investment will be made in the activities relating to innovation, capacity building, performance management, service delivery, justice sector, police, research, reforms in public sector including regulatory framework and statistics sectors. It is expected that the successful implementation of these initiatives will improve governance indicators to a level better than the South Asian countries during the 13th Plan period 2024-29. An amount of more than Rs.90 billion would be required to meet the Plan targets of governance initiatives at federal and provincial levels. 

Action Plan
Institutional Reforms and Governance