ISLAMABAD: The state-run Pakistan Institute of Development Economics (PIDE) has urged the government to launch an urgent national savings drive through budgetary measures later this week to reverse a sharp decline in the country’s savings rate over the past three decades.

In a policy note issued ahead of the federal budget, PIDE said the drive should be launched immediately before the next crisis hits Pakistan, where national savings have fallen to just Rs6 out of every Rs100 of income, contributing to an investment crisis.

“Pakistan’s gross domestic savings have collapsed from 17.4pc of GDP in 1992 to just 6.4pc in 2024, the weakest in a generation and far below every regional peer,” wrote PIDE’s Professor of Economics Dr S.M. Naeem Nawaz and Research Economist Wajid Islam.

The policy note, titled “Mobilising Domestic Savings: A Finance Bill and Institutional Reform Agenda for Pakistan”, urged that the Finance Bill 2026-27 should launch a targeted National Savings Mobilisation Package before the country’s shrinking savings base triggers another external financing crisis.

Says Pakistan saves only Rs6 of every Rs100

The report argued that a significant stock of household wealth currently locked in cash, gold, real estate, committees and foreign currency must be redirected into regulated financial channels.

It said expanded retail access to sukuk, Shariah-compliant savings instruments, voluntary pension schemes, takaful, micro-insurance, REITs, regulated gold funds and digitised National Savings products, along with simplified know-your-customer requirements for small-balance accounts, could help close the gap.

“For 30 years, we have financed our ambitions with other people’s money, and paid for it with recurring crises,” Dr Nawaz said.

“The choice is no longer austerity versus growth. It is whether we keep renting our future from foreign creditors, or finally rebuild the domestic savings base that every successful economy has relied on,” he added.

“This is not about advising households to be frugal; it is about changing incentives and nudging them to save,” said Wajid Islam.

The authors cautioned that tax incentives alone would not be sufficient. Sustained progress, they said, would require price stability, credible after-tax real returns, stronger consumer protection and disciplined public expenditure management.

They warned that unless public-sector dissaving and fiscal crowding-out were addressed in parallel, mobilised savings could be absorbed by recurrent budget deficits rather than channelled into productive investment.

To ensure accountability, the report recommended an annual Savings Mobilisation Dashboard to track domestic savings rates, formal savings uptake, voluntary pension participation, retail sukuk investment, women-owned accounts and private-sector credit allocation.

Published in Dawn, June 8th, 2026