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Mobilizing Domestic Savings: A Finance Bill and Institutional Reform Agenda for Pakistan

Author

Listed:
  • Shahzada M. Naeem Nawaz

    (Pakistan Institute of Development Economics, Islamabad)

  • Wajid Islam

    (Pakistan Institute of Development Economics, Islamabad)

Abstract

Pakistan's budget strategy usually relies on taxation and borrowing. However, it does not emphasize a durable financing framework, which requires mobilizing domestic savings, redirecting informal savings toward formal instruments, and reducing public-sector dissaving. As such, a larger share of investment must be financed from domestic resources. Pakistan's gross domestic savings rate fell from 17.4% of GDP in 1992 to 6.4% in 2024, widening dependence on foreign savings. The Finance Bill FY2026-27 should introduce a targeted National Savings Mobilization Package built around capped tax incentives, approved long-term instruments, digital and Islamic savings products, pension reform, and credible real returns.

Suggested Citation

  • Shahzada M. Naeem Nawaz & Wajid Islam, 2026. "Mobilizing Domestic Savings: A Finance Bill and Institutional Reform Agenda for Pakistan," PIDE Policy View Point 2026:63, Pakistan Institute of Development Economics.
    • Handle: RePEc:pid:pviewp:2026:63
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