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

Shahzada M. Naeem Nawaz and Wajid Islam
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Shahzada M. Naeem Nawaz: Pakistan Institute of Development Economics, Islamabad
Wajid Islam: Pakistan Institute of Development Economics, Islamabad

No 2026:63, PIDE Policy View Point from Pakistan Institute of Development Economics

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.

Pages: 13 pages
Date: 2026
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