More than 75 years after its birth, Pakistan remains a country of unrealized economic promise. From moments of remarkable growth to periods of crushing crisis, the country’s economic trajectory has often followed the rhythms of its turbulent politics.
Today, as Pakistan once again stares down the barrel of debt, inflation, and public frustration, one must ask: Is there still a path to recovery, or have we resigned ourselves to simply managing collapse?
The Founding Years (1947–1958): Hope Amid Scarcity
Pakistan’s economic journey began in 1947 with severe limitations. There were no central institutions, barely any industry, and a refugee crisis that placed immense pressure on resources. Yet under leaders like Liaquat Ali Khan, early efforts aimed to lay the foundations of a functioning economy. The creation of the State Bank of Pakistan in 1948 was a milestone, and the focus was initially on agricultural exports, especially cotton and jute.
But political instability set in quickly. After Liaquat’s assassination, weak governments struggled to implement long-term planning. Economic momentum was interrupted just as it was beginning.
Ayub Khan (1958–1969): Growth Without Equity
With the military takeover in 1958, General Ayub Khan’s technocratic rule introduced Five-Year Plans, large-scale industrialization, and infrastructure development. Pakistan saw GDP growth rise to over 6% annually, and cities like Karachi began to thrive.
But the benefits were uneven. A 1968 report by economist Dr. Mahbub-ul-Haq famously revealed that just 22 families controlled two-thirds of Pakistan’s industrial wealth. Prosperity for a few came at the cost of rising inequality and regional resentment, especially in East Pakistan.
Zulfikar Ali Bhutto (1971–1977): Populism Meets Planning
Following the traumatic loss of East Pakistan in 1971, Zulfikar Ali Bhutto promised economic justice through nationalization. Major industries, banks, and educational institutions were brought under state control.
While Bhutto’s intentions had populist appeal, the results were largely disappointing. Bureaucratic control led to inefficiency, private investment dried up, and capital flight began. The economy lost steam, and by the time Bhutto was ousted, Pakistan was once again grappling with stagnation.
Zia-ul-Haq (1977–1988): Foreign Inflows, Institutional Decay
General Zia’s military regime benefited from Cold War geopolitics. With the Soviet invasion of Afghanistan, Pakistan became a key U.S. ally. Aid money flowed in, and remittances from the Gulf surged. While macroeconomic indicators looked stable, institutions were neglected. Corruption flourished, the drug and arms economy took root, and education became a casualty of politicization. Long-term planning gave way to short-term patchwork.
The 1990s: Democracy Without Discipline
The alternating governments of Benazir Bhutto and Nawaz Sharif throughout the 1990s saw Pakistan caught in a vicious cycle of debt, corruption, and missed reforms.
Benazir’s PPP was marred by accusations of graft, particularly involving her husband, Asif Ali Zardari.
Nawaz Sharif’s PML-N government prioritized the family’s business empire, leading to conflict of interest concerns.
The economy continued to decline, with high fiscal deficits and declining foreign reserves. By the end of the decade, Pakistan was once again on the verge of default.
Musharraf Era (1999–2008): Temporary Relief, No Reform
General Pervez Musharraf’s rule benefited from the post-9/11 U.S. alliance. Pakistan received billions in foreign aid, and the economy briefly stabilized. Banking, real estate, and telecom sectors boomed, with growth touching 7% in 2004–2005.
But these gains were not backed by structural reforms. Agriculture and exports remained neglected. Debt rose again. By 2008, as the global financial crisis hit and aid flows slowed, the economy’s fragile foundation began to crack.
The Return of Civilian Rule (2008–2018): Back to Borrowing
The PPP and PML-N governments of this period leaned heavily on borrowing. Energy crises, tax evasion, and ballooning circular debt plagued the economy.
CPEC (China-Pakistan Economic Corridor), launched in 2015, was a bright spot, but it too was politicized and mismanaged.
Corruption allegations continued, and despite rising debt, exports remained stagnant.
Imran Khan’s PTI (2018–2022): Promises vs. Practicality
Imran Khan came to power on an anti-corruption wave, promising to build a new Pakistan. But his government struggled to manage the economy. Key issues included:
Record currency devaluation (PKR went from 120 to 180+ per USD)
Soaring inflation
Repeated reliance on IMF bailouts
Though Khan criticized IMF programs before coming to power, his government signed a $6 billion IMF deal in 2019, followed by negotiations for additional tranches during COVID-19.
The IMF Dependency: Safety Net or Trap?
Pakistan has approached the IMF more than 20 times, often with the same plea: a bailout to avoid economic collapse.
The Advantages:
Immediate inflow of foreign currency
Stabilization of the exchange rate
Confidence for other lenders (World Bank, ADB)
The Costs:
Subsidy cuts (especially on fuel and electricity)
Currency devaluation
Taxation that hits the middle class and poor hardest
Public anger and political backlash
While IMF programs are designed to help economies recover, Pakistan’s pattern of borrowing without reform means that every deal only delays the next crisis.
Is Economic Independence Possible?
It’s not easy, but it is achievable.
What Pakistan Needs to Do:
Tax the untaxed: Traders, real estate tycoons, and feudal landlords must pay their fair share.
Invest in human capital: Without educated, healthy citizens, growth will always be shallow.
Fix energy sector leaks: Circular debt now crosses PKR 2.5 trillion, a silent killer of the economy.
Support exports and SMEs: Pakistan must move from consumption to production.
End elite capture: No more amnesties, write-offs, or sweetheart deals for the rich.
The Fight Ahead:
Pakistan’s economy has never lacked potential; it has lacked leadership willing to look beyond the next election. The real burden lies not on the IMF, nor even foreign creditors, but on ourselves. Our choices, our governance, our discipline—or the lack of it—have brought us here.
The question is no longer whether we need help; it is whether we are finally ready to help ourselves. Pakistan doesn’t need another bailout. It needs a reboot, built on accountability, honesty, and the courage to tax power where it lives.
The road to recovery isn’t easy, but it exists. Whether we walk it or wait again for others to save us, that choice, as always, is ours.
