Structural Issues

• Low tax-to-GDP ratio (~9-10%) — narrow tax base, heavy reliance on indirect taxes, massive undocumented/informal economy
• Chronic fiscal deficit — government spends far more than it collects, funded by domestic/external borrowing
• Twin deficits — persistent current account deficit + fiscal deficit reinforcing each other
• Low exports, import-dependent economy — reliance on imported oil, machinery, raw materials without matching export growth (textiles remain largest but stagnant export base)

Energy Sector Crisis

• Circular debt in power sector (unpaid subsidies/bills cascading through the system) — tens of billions of rupees
• High electricity/gas tariffs due to expensive imported fuel + inefficient distribution (line losses, theft)
• IPP (Independent Power Producer) capacity payment obligations regardless of usage

Debt Burden

• Heavy reliance on IMF bailout programs (23+ programs since 1958) — recurring boom-bust cycle without structural reform
• External debt servicing consumes large share of forex reserves
• Domestic debt also rising sharply, crowding out development spending

Political Instability Factor

• Frequent government changes disrupt long-term economic policy continuity
• Populist short-term measures (subsidies, artificially low utility prices) instead of structural reform
• Civil-military tensions divert focus/resources from sustained economic planning

Governance & Institutional Weaknesses

• Weak tax collection enforcement, widespread exemptions for elite/powerful sectors (real estate, agriculture largely under-taxed)
• State-Owned Enterprises (PIA, Pakistan Steel, Railways) run at chronic losses, drain budget