# *Detailed SUMMARY of the article "'Direction of travel' is downwards" by S. Akbar Zaidi, Published in Dawn on June 21st, 2025:* The article critiques *Pakistan's federal budget 2025*, highlighting the country's deteriorating *socio-economic indicators* despite claims of economic stabilization. *Pakistan* ranked *last* among *148 countries* in the *World Economic Forum's Global Gender Report 2025*, with the *gender parity ratio* declining for *two consecutive years*. Nearly *half of Pakistan's population* lives below the *international poverty line*, with *extreme poverty* increasing *threefold* from *under 5%* to *16.5%*. The author argues that the *finance minister's* claims of economic improvement contradict ground realities, as the *"direction of travel"* remains *downward*. *Pakistan's savings rate* is only *14%* compared to *China's 44%*, *India's 29%*, and *Bangladesh's 25%*, limiting investment and growth. The budget imposes additional taxes on *savings* (from *15%* to *20%*) and *solar panels* (*18%* sales tax, later reduced to *10%*), which are *anti-growth* and *anti-environment*. While *government servants* received a *10% salary increase* and *parliamentarians* got higher raises, the *minimum wage* of *Rs37,000* remained unchanged, showing insensitivity to *poverty*. The *IMF-guided* budget focuses on *taxation* rather than *productivity*, taxing *freelancers* and *IT innovators* while dreaming of *$25 billion IT exports*. The *higher education budget* has declined in *real terms*, and the *25% tax rebate* for *teachers and researchers* (many being *women*) was removed. Despite favorable conditions—*military-civilian alignment*, *economic stabilization*, *low inflation*, *political stability*, and *international support* from *President Trump*—the budget remains *anti-growth* and *anti-poor*, representing a *wasted opportunity* for *bold reforms*. # *Easy/Short SUMMARY*: *Pakistan's 2025 budget* disappoints despite favorable conditions. The country ranks *last globally* in *gender parity*, with *half the population* in *poverty* and *extreme poverty* rising to *16.5%*. The *IMF-guided budget* increases taxes on *savings* and *solar panels* while ignoring the *Rs37,000 minimum wage*. Despite *economic stabilization* and *political stability*, the budget remains *anti-growth* and *anti-poor*, wasting an *unprecedented opportunity* for *transformative reforms*. # *SOLUTIONS of The Problem*: ## *1. Increase Minimum Wage* Raise the *minimum wage* from *Rs37,000* to at least *Rs45,000* to address *poverty* and show *government sensitivity*. ## *2. Reduce Tax on Savings* Lower the *savings tax* from *20%* back to *15%* or below to encourage *domestic savings* and *investment*. ## *3. Remove Solar Panel Tax* Eliminate the *sales tax* on *solar panels* to promote *renewable energy* and combat *climate change*. ## *4. Tax the Untaxed Sectors* Impose *income and wealth taxes* on *retail*, *real estate*, and *agricultural incomes* instead of over-taxing compliant taxpayers. ## *5. Support IT and Freelancers* Provide *tax incentives* to *freelancers* and *IT professionals* to achieve the *$25 billion export target*. ## *6. Restore Education Incentives* Reinstate the *25% tax rebate* for *teachers and researchers* to support the *knowledge economy*. ## *7. Increase Higher Education Budget* Boost the *federal higher education budget* in *real terms* to promote *innovation* and *research*. ## *8. Focus on Gender Equality* Launch targeted programs to improve *Pakistan's gender parity ranking* from *148th position*. ## *9. Implement Pro-Poor Policies* Design *poverty reduction programs* to address the *16.5% extreme poverty rate* effectively. ## *10. Encourage Private Investment* Create *investment-friendly policies* to boost *Pakistan's low investment-to-GDP ratio* compared to regional peers. # *IMPORTANT Facts and Figures Given in the article*: - *Pakistan* ranked *last* among *148 countries* in *World Economic Forum's Global Gender Report 2025*. - Nearly *half of Pakistan's population* is below the *international poverty line*. - *Extreme poverty* increased from *under 5%* to *16.5%*. - *Pakistan's savings rate* is only *14%* compared to *China's 44%*, *India's 29%*, and *Bangladesh's 25%*. - *Tax on savings* increased from *15%* to *20%*. - *Sales tax* on *solar panels* was *18%*, later reduced to *10%*. - *Government servants* received a *10% salary increase*. - Current *minimum wage* is *Rs37,000*. - *IT export target* is *$25 billion*. - *25% tax rebate* for *teachers and researchers* was removed. # *IMPORTANT Facts and Figures out of the article*: - *Pakistan's GDP growth rate* was *2.4%* in *2024* (*World Bank*, 2024). - *Investment-to-GDP ratio* in *Pakistan* is *15.5%* compared to *China's 42%* (*Asian Development Bank*, 2024). - *Pakistan's inflation rate* dropped to *4.9%* in *May 2025* (*State Bank of Pakistan*, 2025). - *Women's labor force participation* in *Pakistan* is *22.6%* (*International Labour Organization*, 2024). - *Pakistan* has *240 million population* with *60% under 30 years* (*Pakistan Bureau of Statistics*, 2024). - *Higher education enrollment* in *Pakistan* is *5.1 million students* (*Higher Education Commission*, 2024). # *MCQs from the Article*: ### 1. *What was Pakistan's ranking in the World Economic Forum's Global Gender Report 2025?* A. 140th B. 145th *C. Last (148th)* D. 135th ### 2. *What percentage of Pakistan's population is below the international poverty line?* A. One-third *B. Nearly half* C. One-quarter D. Two-thirds ### 3. *What is Pakistan's current savings rate compared to China's?* A. 14% vs 34% *B. 14% vs 44%* C. 14% vs 54% D. 14% vs 24% ### 4. *By how much did the tax on savings increase in the budget?* A. From 10% to 15% *B. From 15% to 20%* C. From 20% to 25% D. From 12% to 18% ### 5. *What is Pakistan's current minimum wage mentioned in the article?* A. Rs35,000 *B. Rs37,000* C. Rs40,000 D. Rs45,000 # *VOCABULARY*: 1. *Parity* (برابری) – Equality or equivalence in status 2. *Deteriorated* (بگڑنا) – Became worse in quality or condition 3. *Consecutive* (متواتر) – Following continuously in sequence 4. *Dismal* (مایوس کن) – Causing gloom or disappointment 5. *Feigned* (بناوٹی) – Pretended or fake 6. *Comparable* (موازنہ کے قابل) – Able to be compared 7. *Appraisal* (تشخیص) – Assessment or evaluation 8. *Persuasions* (نقطہ نظر) – Different viewpoints or beliefs 9. *Underscore* (زور دینا) – To emphasize or highlight 10. *Disregard* (نظرانداز) – Lack of attention or respect 11. *Catastrophe* (تباہی) – A sudden disaster or misfortune 12. *Unfolding* (ظاہر ہونا) – Developing or revealing gradually 13. *Symbolic* (علامتی) – Representing something beyond itself 14. *Tutelage* (سرپرستی) – Protection or guidance 15. *Mantra* (نعرہ) – A repeated principle or slogan 16. *Disheartened* (مایوس) – Discouraged or dispirited 17. *Imperative* (لازمی) – Of vital importance; crucial 18. *Galore* (بہت زیادہ) – In abundance; plenty 19. *Callous* (بے رحم) – Showing no concern for others 20. *Fortuitous* (خوش قسمتی سے) – Happening by chance; fortunate 📢 *Attention Please!* We appreciate your commitment to acquiring knowledge through our summaries. 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Akbar Zaidi* *6–8 minutes* TWO days after the federal budget was announced by the finance minister, the World Economic Forum's Global Gender Report 2025 revealed that Pakistan was ranked last amongst 148 countries. This is an absolutely extraordinary situation for Pakistan and its women, especially when these findings disclosed that this score had actually deteriorated consecutively over the last two years showing a continuous and consistent downward trend in the gender parity ratio. Since this information was revealed after the finance minister's budget speech, he could be forgiven for not knowing about the dismal status of women in Pakistan — although in one of his press conferences he did say that he had been aware of the state of Pakistan's economy for the last 11 years or so. How anyone can be aware of Pakistan's economy and not know of the status of its women is difficult to imagine. While the finance minister could have feigned ignorance about the deteriorating status of women in Pakistan, he certainly knew about the recent data from the World Bank regarding Pakistan's poverty rate. This data has revealed that nearly half of Pakistan's population is below an internationally comparable poverty line. Importantly, here again data shows that the population under each poverty line has increased over the last few years, implying that poverty is growing despite claims that the economy has 'improved'. And for those in extreme poverty in Pakistan, the numbers have actually increased by more than threefold, from under five per cent to 16.5pc. Again, the 'direction of travel' — a term used by the finance minister to reassure us that the economy is improving — clearly and alarmingly shows it is headed downwards. Almost every commentary on and appraisal of the recent budget has been either critical and negative, or an outright rejection. Analysts and commentators from differing persuasions have pointed out that this budget is a poor reflection of where the economy is and, more importantly, of the direction of travel needed over the next few years. Given the huge array of numbers and accounting identities in the budget document, it is best to identify just a handful to underscore the complete disregard towards the people of this country. Poverty is not just visible, it is also growing despite all claims that the economy has stabilised and improved. Pakistan has a particularly poor savings rate of just 14pc, one reason why the investment-to-GDP ratio continues to be much lower than comparable countries. China's savings rate is 44pc, India's 29 and Bangladesh 25, much of which explains high investment, and hence growth, in these countries. Savings need to be encouraged in order for growth, and not have an additional tax imposed raising the tax from the already very high 15pc to 20. The climate crisis is probably Pakistan's most urgent potential catastrophe already unfolding and all measures to reverse such trends need to be at the top of the agenda for every government. The 18pc sales tax imposed on solar panels is anti-people and anti-environment, and perhaps some pressure has prevailed to lower this to a still unacceptable 10pc. With poverty not just visibly evident but growing despite all claims that the economy has stabilised and improved, even a symbolic increase in raising the minimum wage in Pakistan would have shown that the finance minister was aware of the poor state of the people. While the salaries of government servants were increased by 10pc and those of parliamentarians and minsters many times that, perhaps increasing the Rs37,000 minimum wage to at least Rs45,000 would have brought some cheer to an over-taxed budget. Tax, tax and more tax — this has been the mantra of this and every government when the budget is made under the tutelage of the IMF. Tax everything which is productive so that people emigrate and feel disheartened to expand and innovate. On the one hand, the government dreams of IT exports of $25 billion over the next few years; on the other, it taxes freelancers and those who are actually innovating and bringing much-needed foreign exchange at a time where remittances exceed all exports. Such contradictory and counterproductive measures bode ill for Pakistan. If tax is the major concern, perhaps income and wealth taxes on retail, real estate and agricultural incomes would have been more appropriate. The imperative is to tax those who don't pay, or avoid paying income tax, not those who continue to be over-taxed. The other contradictions galore in the budget pertain to the knowledge economy. The federal higher education budget has fallen in real terms over the last few years, and the removal of the 25pc tax rebate given to teachers and researchers — many (possibly a majority) of whom may be women — in colleges and universities, has been removed. With manufacturing and agriculture all showing negative growth — the 'direction of travel' here being downwards — the discouragement for the knowledge economy, for IT, and especially for women, stands out as a callous and an unsympathetic effort by someone who claims to know the economy for a dozen years. In many years, if not decades, Pakistan is in a particularly fortunate space. The military and civilian governments are no longer on the 'same page', but are one and indistinguishable from each other. The economy has indeed stabilised and inflation has fallen. Political opposition for now is in disarray and even the government is more stable than it has ever been. Surprisingly, for once Pakistan is being seen in a very positive light internationally with President Donald Trump praising Pakistan at the expense of India, and even having lunch with Pakistan's field marshal. Such a fortuitous combination is unprecedented. For precisely these reasons, for once, Pakistanis anticipated a brave, bold, imaginative, creative, future-oriented budget, which would ensure that the direction of travel would be aggressively upwards. Sadly, this budget is distinctly anti-growth and anti-poor — for both women and men — and reflects very poorly on the how the future is being imagined. If ever there was a wasted opportunity, it is now. The writer is a political economist and heads the IBA, Karachi. The views are his own and do not represent those of the institution. Published in Dawn, June 21st, 2025