Pakistan’s economy has been propped up by episodic external assistance, stabilizing it during crises but failing to bring about structural changes, according to a report. The country has entered a “rent-seeking equilibrium” behavior due to its dependence on aid rather than pursuing economic strategies. This reliance on aid has left Pakistan vulnerable, with weaknesses in productivity, fiscal capacity, and institutional governance unaddressed.
Development specialist Syed Khizar Ali Shah highlighted that Pakistan’s aid reliance has been driven more by geopolitical factors than economic planning. The report emphasized that aid, received during strategic alignments with global powers, has not spurred domestic reforms but merely provided temporary relief during crises. Past regimes, including those of Ayub Khan, Zia-ul-Haq, and Pervez Musharraf, have received substantial aid, which helped in managing debts but did not lead to sustainable industrialization or tax reforms.
While external aid aids in stabilization, the report stressed that it cannot replace fundamental changes needed for development. Overreliance on aid may create a situation where policies focus on securing external funds rather than building internal capacity. The report called for Pakistan’s government to prioritize investments that enhance productivity, strengthen institutions, and develop human capital, all while ensuring transparency and performance evaluation.
