Country Report 2024 PAK

BTI 2024 Country Report
Pakistan
This report is part of the Bertelsmann Stiftung’s Transformation Index (BTI) 2024. It covers
the period from February 1, 2021 to January 31, 2023. The BTI assesses the transformation
toward democracy and a market economy as well as the quality of governance in 137 countries.
More on the BTI at https://www.bti-project.org.
Please cite as follows: Bertelsmann Stiftung, BTI 2024 Country Report — Pakistan. Gütersloh:
Bertelsmann Stiftung, 2024.
This work is licensed under a Creative Commons Attribution 4.0 International License.
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BTI 2024 | Pakistan 3
Key Indicators
Population M 235.8 HDI 0.544 GDP p.c., PPP $ 6437
Pop. growth1 % p.a. 1.9 HDI rank of 189 161 Gini Index 29.6
Life expectancy years 66.1 UN Education Index 0.392 Poverty3 % 39.8
Urban population % 37.7 Gender inequality2 0.534 Aid per capita $ 11.7
Sources (as of December 2023): The World Bank, World Development Indicators | UNDP, Human Development Report
2021-22. Footnotes: (1) Average annual growth rate. (2) Gender Inequality Index (GII). (3) Percentage of population
living on less than $3.65 a day at 2017 international prices.
Executive Summary
Throughout the period under review (2021 – 2022), Pakistan faced significant challenges on both
the political and economic fronts. After years of claiming to be on the “same page” as Pakistan’s
powerful military establishment, the Pakistan Tehreek-i-Insaf (PTI) government that came to
power in 2018 was ousted in April 2022 by a vote of no confidence in the parliament. The vote
was initiated by the Pakistan Democratic Movement (PDM), an alliance of parties that includes
the Pakistan Muslim League Nawaz (PML-N), the Pakistan People’s Party (PPP) and the Jamaat-
i-Ulama Islam (JUI). However, the vote was only able to succeed after the Muttahida Quami
Movement (MQM) defected from the ruling coalition to support the PDM. At the time, it was clear
that the success of the vote could be attributed to the military establishment’s withdrawal of
support for the PTI. Differences had emerged between the two erstwhile partners over the direction
of Pakistan’s foreign policy, the appointment of armed forces personnel and the economic
performance of the PTI government when then-army chief General Qamar Javed Bajwa
announced a policy of political “neutrality” that was widely interpreted as a signal that the PTI no
longer enjoyed the military’s support.
In the aftermath of the PTI’s ouster, its leader – former Prime Minister Imran Khan – claimed that
his government had been toppled by a regime change conspiracy orchestrated by the United States,
and carried out by General Bajwa and the PDM. Khan asserted that the United States had wanted
him removed due to his desire to pursue an independent foreign policy. While evidence supporting
this theory remained questionable, it resonated with the PTI’s supporters and fueled the party’s
increasingly forceful calls for new elections. Throughout 2022 and into 2023, Imran Khan and his
party organized protests against the PDM government and General Bajwa (who retired in
November 2022), challenging the former’s legitimacy and mobilizing support in anticipation of
general elections. In response, the PDM, led by Shahbaz Sharif, brother of the former prime
minister and PML-N leader, Nawaz Sharif, has refused to commit to holding elections. The PDM
has resorted to various delaying tactics, while simultaneously attempting to suppress the PTI
leadership through court cases, and arbitrary arrests and disappearances.
This political instability occurred within the context of an escalating economic crisis that brought
Pakistan to the brink of default in the first half of 2023. Rising international commodity and fuel
prices, high debt repayment levels, and lackluster economic performance have all contributed to a
balance-of-payments crisis that has seen Pakistan’s foreign currency reserves dwindle. This
situation was further exacerbated by misguided policy decisions, such as subsidizing petrol and
artificially boosting the value of the rupee. The PDM government is currently negotiating a bailout
with the IMF, while Pakistan also grapples with double-digit inflation and the economic impact of
record flooding in 2022.
Levels of violence in Pakistan have remained relatively low compared to the decade from 2008 to
2018. However, there has been a steady increase in terrorist activity following the return to power
of the Taliban in Afghanistan in 2021. This resurgence has been accompanied by the return of the
Tehreek-i-Taliban Pakistan (TTP), a violent militant outfit responsible for perpetrating numerous
terrorist attacks in Pakistan over the past decade.
History and Characteristics of Transformation

Since achieving independence from British rule in 1947, Pakistan’s history has alternated between
democratic and authoritarian rule, with a powerful military establishment exerting significant
influence over the country’s politics. The most recent episode of military rule in Pakistan ended
in 2008 with the overthrow of General Pervez Musharraf. However, the military continues to wield
power behind the scenes, protecting and expanding its economic interests and pursuing its broader
goals. Regional security objectives are pursued by attacking civilian politicians, parties and
movements that pose a threat through the manipulation and co-optation of the media, courts and
allied political elites.
Pakistan has been wracked by serious ethnic cleavages. In 1971, the eastern part of the country
seceded to become Bangladesh after years of economic exploitation and political marginalization.
The western part of the country, which was dominated by ethnic Punjabis and to a lesser extent
migrants from India called Mohajirs, occupied prominent positions within the country’s
bureaucracy. In contemporary Pakistan, these ethnic divisions continue to be significant, with the
people of Balochistan, Sindh and Khyber Paktoonkhwa (KP) expressing discontent with the state.
The political landscape of the region continues to be dominated by Punjabi interests. Ethno-
national movements that stem from these grievances persist to the present day, as observed in
Balochistan and KP.
Pakistan’s economy has always comprised powerful landed elites, many of whom were able to
transition to industrial production between the 1960s and the 1980s. These entrenched elites enjoy
close connections to the state and are able to extract rents through their influence over the political
process. This has meant that the state has largely failed to undertake structural reforms aimed at
reducing elite privilege and has repeatedly had to rely on foreign aid to make up for its inability to
grow and tax the economy.
The state has a long history of intervening in the economy, as evidenced by the nationalization of
industries under the government of Zulfiqar Ali Bhutto between 1972 and 1977. Although
subsequent governments have exhibited a commitment to free markets, the state remains a
significant source of employment and patronage, particularly through its management of large
public enterprises. The bureaucratic structure Pakistan inherited from colonial rule was relatively
powerful and autonomous in the years following independence. However, it has become archaic
and inefficient, and has been compromised by party politics and the influence of powerful social
interest groups.
Pakistan has long maintained hostile relations with India. The main bone of contention is over the
status of Kashmir – a disputed territory to which both countries lay claim. Of considerable
economic and strategic importance to both countries, the region has been the cause of three wars.
Numerous smaller conflicts have arisen between Pakistan and India. Historically, Pakistan has
relied on the United States for economic and military assistance. However, in recent years,
Pakistan’s close relationship with China has led to increased cooperation between the two
countries.
Pakistan has always sought to define its identity in religious terms, emphasizing Islam as a source
of national cohesion and citizenship. This has meant that successive governments, as well as the
military, have used Islam as a legitimating ideology. Historically, this has led to the emergence of
powerful religious parties and political movements in Pakistan, with many assuming a more
violent and extremist orientation in recent years. The central role played by Islam in Pakistan’s
public life has also facilitated discrimination and violence directed toward the country’s religious
minorities.
The BTI combines text analysis and numerical assessments. The score for each
question is provided below its respective title. The scale ranges from 1 (worst) to
10 (best).
Transformation Status
I. Political Transformation
Question
1 | Stateness Score
The Pakistani state’s monopoly on the use of force is contested by terrorist Monopoly on the
organizations, sectarian groups, ethno-nationalist insurgencies, and criminal gangs use of force
involved in the smuggling of goods and narcotics. Much of the violence perpetrated 5
by these actors is concentrated in the province of Balochistan – where separatist
groups, such as the Balochistan Liberation Army (BLA), often attack security
personnel and non-Baloch citizens – as well as in former Federally Administered
Tribal Areas (FATA) along the border with Afghanistan, which were formally
merged into the KP province following the passage of the 25th amendment to the
constitution in 2018. Implementation of the merger, however, remains slow.
In the early 2000s, Pakistan’s status as a frontline state in the war on terror saw the
country grapple with the challenges posed by militant and terrorist groups that
orchestrated acts of violence across the country. Repeated military operations
targeting these organizations – most recently as part of the National Action Plan,
which was initiated in 2015 – have reduced terrorist violence. However, the
withdrawal of the United States from Afghanistan in 2021 and the return to power of
the Afghan Taliban have arguably created the conditions for groups such as the
Tehreek-i-Taliban Pakistan (TTP) to regroup and relaunch their campaign against the
Pakistani state. According to the South Asia Terrorism Portal, there were 424
incidents of terrorism with 214 civilian deaths in 2021 and 630 incidents in 2022 with
229 civilian deaths.
Terrorist attacks continue to take place in 2023. In January, a mosque attached to the
provincial police headquarters was bombed by the Jamaat-ul-Ahrar, a faction of the
TTP, killing 101 people. In February, the TTP took responsibility for an attack on the
police headquarters in Karachi that left four people dead.
Notions of citizenship in Pakistan have historically been defined in terms of religion. State identity
Islam plays a significant role in public life, with actors inside and outside government 5
making use of religious appeals to pursue social and political goals. Mainstream
parties such as the PTI and the PML-N often cite their commitment to upholding
Islamic law when campaigning. Islamic organizations, ranging from non-violent
parties (e.g., the Jama’at-i-Ulama Islam, JUI) to hard-liners (e.g., the Tehreek-i-
Labaik Pakistan, TLP) to violent extremist outfits (e.g., the Ahle Sunnat Wal Jama’at,
ASWJ), also employ Islamic idioms to question the state’s legitimacy, and to justify
the coercive and non-coercive measures they aim to impose on society.
The state’s own historical reliance on Islam as a legitimizing ideology has meant that
it often concedes space to religious groups, at the expense of religious minorities
across the country. Among others, Hindus, Christians and Ahmadis experience
considerable discrimination on the basis of their faith. Religious discrimination is
also enshrined in the country’s legislation. For example, all non-Muslim citizens of
Pakistan are barred by law from holding the office of president and are generally
excluded from the highest offices of the state, bureaucracy and military.
Pakistan’s emphasis on Islam as a source of citizenship and identity has led to the
delegitimization of alternative forms of identity rooted in ethnicity and language. In
1971, the marginalization of Bengalis in former East Pakistan was one of the factors
that led to the creation of Bangladesh. Furthermore, ethno-nationalist movements
demanding greater provincial autonomy and cultural recognition exist or have existed
in Balochistan, Sindh, KP and Gilgit-Baltistan. While the power of these movements
has declined in recent decades due to state coercion and political co-optation, ethno-
national sentiment remains prevalent in these provinces. In Balochistan, separatist
outfits, such as the BLA, continue to wage war against the state.
According to the 1973 constitution, Pakistan is an Islamic Republic, the laws of which No interference of
must be enacted in accordance with Shariah law. While this principle is not always religious dogmas
followed in practice, there are significant law and policy fields that are influenced by 3
orthodox interpretations of Islamic doctrine. Institutions such as the Council of
Islamic Ideology (CII), an advisory body comprised of religious scholars that
provides opinions on the validity of and compatibility with religion in proposed
legislation, and the Federal Shariat Court (FSC), a constitutional court that rules on
whether Pakistani laws adhere to Islamic principles, have historically played a role in
shaping certain legislative outcomes. In a notable 1989 judgment, for example, the
FSC declared land reforms to be un-Islamic. The CII ruled against the use of DNA
as primary evidence in rape cases in 2013, lobbied against new laws that would have
criminalized child marriages and domestic violence against women in 2016, and
deemed the Transgender Persons (Protection of Rights) Act of 2018 to be
“inconsistent with Islamic principles” in 2022.
Blasphemy remains a criminal offense in Pakistan, punishable by death. The low
burden of proof required to register a case of blasphemy against someone has led to
the law being used to settle disputes and target religious minorities, including Shi’ite
Muslims. In February 2023, for example, the National Assembly of Pakistan passed
a new bill further strengthening the blasphemy law by extending its provision to
“blasphemy” committed against the companions of the Holy Prophet. This measure
deliberately aimed to criminalize statements about historical religious figures who,
while revered by many Sunni Muslims, are sometimes criticized by Shi’ites.
Political leaders also continue to invoke religion to acquire legitimacy and build
support. In 2022, former Punjab Chief Minister Chaudhry Parvez Elahi repeatedly
invoked the Finality of Prophethood – a religious doctrine used to justify
discrimination against the Ahmadi sect – in his public pronouncements. While
describing his legislative goals, Finance Minister Ishaq Dar vowed to follow Islamic
principles by creating an interest-free economy (an issue that has been raised
repeatedly since the 1980s). Furthermore, leaders of rival parties routinely accuse
each other of blasphemy.
The state’s track record of providing basic services remains patchy at best. This is Basic
illustrated by Pakistan’s relatively poor values on social indicators, which are administration
evidence of a deficient state infrastructure that – plagued by corruption, and a lack of 5
resources and capacity – fails to deliver on its responsibilities. According to the
Pakistan Economic Survey, the country’s literacy rate was 63% in 2021/2022, up
from 60% in 2019/2020. Data from UNICEF shows that the mortality rate of children
under five declined slightly from 67.2 per 1,000 live births in 2019 to 63.3 per 1,000
live births in 2021. According to the World Back World Development Indicators
2022, only 75.4% of the population have access to electricity, 90.1% have access to
at least a basic source of water, 35.8% have access to an improved water source, and
68.4% have access to at least basic sanitation.
Parts of the country lack communication and transport infrastructure, depriving

citizens of connectivity, and alternatives to traveling long distances for medical care
and other services. The state’s limited ability to provide public services to its citizens
has been further illustrated in the aftermath of record floods in 2022, which affected
33 million people and more than 12% of the country’s total area. At a time when
Pakistan confronts serious economic challenges, the state has been largely unable to
address the needs of those affected by the floods.
Pakistan’s administrative challenges can be seen in the country’s relatively low tax-
to-GDP ratio. At just 9.2% in 2021/2022, it is one of the lowest ratios in the region,
symptomatic of the state’s inability to effectively assess and tax its citizens. Most of
Pakistan’s tax revenue is derived from indirect sources, such as the general sales tax.
Meanwhile, widespread corruption and the existence of a large informal economy
mean that wealthy individuals and organizations have historically been able to evade
taxation.
Pakistan’s ability to deliver public services at the local level continues to be

hamstrung by several factors. The clientelist nature of politics in the country means
that elected officials prefer to engage in targeted service delivery that benefits their
supporters rather than adopt more universalistic and programmatic approaches that
would help all of their constituents. Rent-seeking and corruption remain rife in the
bureaucracy and among the political elite. Significantly, power remains concentrated
in the hands of the federal and provincial governments, with very little administrative
or fiscal devolution to local governments that might be more responsive to the
developmental needs of Pakistan’s citizens.
2 | Political Participation
Elections in Pakistan have historically been marred by widespread irregularities, Free and fair
allegations of manipulation and disputed results. While all adults over the age of 18 elections
have the right to vote, registering as a voter can sometimes be an onerous process as 5
it requires the possession of a national identity card provided by the National
Database and Records Administration Authority (NADRA). In 2022, the Free and
Fair Election Network (FAFEN) estimated that up to 20 million eligible voters were
not registered with the Election Commission of Pakistan (ECP), 80% of whom lacked
ID cards. Similarly, levels of voter turnout and registration tend to be lower among
women than among men. In the last general elections in 2018, the gap in turnout
between men and women stood at 9.1%, with 11 million fewer women than men
voting.
In Pakistan, there are few legal barriers to registering a political party or contesting
an election as a candidate. In practice, however, while there are thousands of
“independent” candidates and dozens of smaller parties contesting elections in
constituencies across the country, electoral contests remain dominated by a small
number of large political parties, such as the PML-N, PTI and PPP. These, in turn,
tend to select candidates from a pool of “electable” local elites who possess the
economic and social power needed to mobilize voter blocs.
Elections in Pakistan are administered by the ECP, which is headed by a chief election
commissioner appointed following a consultative process involving the government
and opposition parties. However, the ECP relies on the provincial bureaucracies to
conduct elections on polling day, staffing polling booths with government employees
drawn from education departments and the police. This has allowed incumbent
provincial governments to use their control over the bureaucracy to influence and
manipulate electoral results on polling day, leading to allegations of vote rigging. The
disputed nature of elections in Pakistan is exacerbated by the ever-present
interference of the military establishment, which is widely believed to influence
electoral contests by fostering candidate defections, controlling polling staff and
imposing other constraints on the conduct of elections. Indeed, the PTI government
that was voted into power in 2018 was labeled “selected” by the opposition amidst
claims its victory had been engineered by the military.
Pakistan’s military establishment continues to exercise a tremendous amount of Effective power to

power over questions of policy and governance, playing the principal role in shaping govern
Pakistan’s foreign policy as well as issues related to its internal security. Pakistan’s 3
civilian leadership, including the prime minister, regularly meets with the country’s
chief of army staff and head of the Inter-Services Intelligence (the main intelligence
agency). In these meetings, matters pertaining to international and domestic affairs
are discussed, while former military officers have been appointed to key posts in
government. This can be seen as a de facto consultation of the military in the political
process.
The PTI’s ouster in 2022 was arguably a result of the military’s dissatisfaction with
the government, as discord emerged between the PTI and military over Pakistan’s
relationship with the United States, and the extent of the prime minister’s authority
to appoint personnel, such as the head of the ISI. By the same token, the PDM
government that succeeded the PTI was arguably cobbled together and is being kept
in place due to support and patronage from the military establishment.
Within the civilian arena, propertied elites drawn from the landowning and
industrial/commercial classes continue to dominate electoral politics, using their
position to evade taxation and receive preferential treatment with regards to business
and other economic opportunities. According to the UNDP’s Human Development
Report for 2020, elite privilege in Pakistan – in the form of subsidies and other
benefits – amounted to $17.4 billion, or 8% of GDP.
The Pakistani constitution gives individuals the right to associate, although this right Association /
is subject to restrictions imposed by the government in the name of national security. assembly rights
The degree to which these rights are upheld varies in practice. During the period 3
under review, the country has seen the continued imposition of restrictions and
constraints upon associational life, particularly when it assumes a political motivation
that challenges the power and legitimacy of the state. The Pashtun Tahafuz
Movement (PTM), a peaceful Pashtun nationalist movement protesting the repressive
policies that accompanied Pakistan’s military campaign against Islamist groups in the
northwest, continues to be banned by the state. One of its leaders, the legislator Ali
Wazir, was released from prison in February 2023 after four years in jail, while others
remain incarcerated.
Article 19 of the Pakistani constitution guarantees freedom of speech to all citizens, Freedom of
albeit subject to restrictions that may be imposed in the name of national security and expression
Islam. These qualifications on the right to free speech and expression have been 3
reproduced in legislation like the Prevention of Electronic Crimes Act of 2016
(PECA), which has granted the government extensive powers to investigate and
prosecute individuals for online speech, and which has been increasingly used to stifle
dissent in recent years. In August 2021, the journalists Amir Mir and Imran Shafqat
were arrested by the Federal Investigation Agency (FIA) for allegedly criticizing the
military on social media, and PECA was also invoked in the arrest of journalist
Mohsin Baig in February 2022. In these cases, ministers in the PTI government
lodged complaints that led to these arrests.
After its ouster in April 2022, the PTI found itself on the receiving end of these
attacks. The residence of the head of the PTI’s social media wing, Arsalan Khalid,
was raided by the police in April 2022, while former minister Shahbaz Gill was
arrested in August 2022 for making statements against the military on TV. Similar
allegations were made against Senator Azam Swati when he was arrested in October
2022 and, in February 2023, against a young PTI supporter, Sikander Zaman, who
was sentenced to three years in prison for posting a tweet critical of the military. The
powers of the FIA to investigate and arrest people under PECA were further enhanced
by the PDM government in November 2022.
In addition to PECA, which has been used as a pretext for suppressing free speech
and prosecuting critics of the state, the government makes use of the Pakistan
Telecommunications Authority (PTA) to regulate and control the electronic media.
At present, the government blocks access to an estimated 900,000 websites around
the world, some of which are banned for hosting political, social and religious
content. The government retains the power to arbitrarily restrict access to websites
for various reasons. In 2022, Pakistan received a score of 26 out of 100 on Freedom
House’s Internet Freedom Index.
The restrictions on free expression in Pakistan are not limited to the internet. For
example, a conference, which was due to be held at Lahore University of
Management Sciences in March 2021 on the legacy of Bangladesh’s 1971 liberation
war, was canceled by the host university after the university was pressured by the
government to do so. In October 2022, the pro-PTI journalist Arshad Sharif was
murdered under mysterious circumstances in Kenya, with members of the PTI
suggesting he had been killed for criticizing the military establishment. In its 2022
report on press freedoms, Reporters without Borders ranked Pakistan 157 out of 180
countries, representing a decline of 12 places from its ranking in 2021.
3 | Rule of Law
The constitution of Pakistan mandates a formal separation of powers between the Separation of
judiciary, legislature and executive, although this division is often blurred in practice. powers
Historically, Pakistan’s judiciary has played an ambivalent role, both legitimizing 4
military rule (e.g., in 2000, when it validated the coup that brought General Musharraf
to power) and resisting it (in 2008, when the courts and legal community took the
lead in opposing General Musharraf’s regime). More recently, the Supreme Court
rejected attempts by the PTI government to dissolve the National Assembly on the
eve of a vote of no-confidence that was scheduled for April 2022.
In a 2022 report on legislative performance in Pakistan, the Pakistan Institute of

Legislative Development and Transparency (PILDAT) noted that, while the
parliament had engaged in lawmaking, legislative activity had declined by 8%
compared to 2021. As noted in the report, the PTI government that ruled from 2018
to 2022 preferred to rule through executive fiat, making use of presidential ordinances
to pursue its political agenda instead of negotiating with opposition parties. Since
April 2022, this process has only been exacerbated by the PTI’s withdrawal from
parliament altogether. Legislative activity under the current PDM government has
come to a de facto gridlock, while the provincial high courts and Supreme Court
continue to entertain a variety of petitions pertaining to fresh elections. Coupled with
the continued lack of control exercised by the civilian government over the military
establishment, this suggests that considerable power is exercised by the executive in
coordination with the military, with the judiciary playing – once again – an
increasingly interventionist role in political matters.
In the past decade, Pakistan’s courts have played a more activist role in Pakistan’s Independent
politics, using the power of judicial review to overturn legislation passed by judiciary
parliament and to intervene in affairs traditionally seen as the domain of the 3
executive. Between 2018 and 2022, the political role of the Supreme Court in
particular was brought into question as it was seen as being sympathetic to the ruling
PTI government. The argument that the Supreme Court is politicized often receives
credence from the manner in which it hears cases. The power to appoint judges to
preside over cases rests exclusively with the chief justice, and recent years have seen
the repeated appointment of judges viewed as being pro-PTI to adjudicate cases
involving the party. Meanwhile, judges who are seen to be critical of the military
establishment, such as Qazi Faez Isa, have been sidelined.
At lower levels, the judiciary continues to be characterized by a lack of resources,

leading to high levels of corruption and a massive backlog of an estimated two million
cases. Bar associations and other legal bodies have emerged over the last decade as
powerful interest groups in society, and often come into conflict with the police and
other groups.
Parallel justice systems built around local tribal norms also continue to operate
throughout the country. While the decisions taken by these informal “courts” do not
have the means to sanction officials, they are often viewed as a legitimate forum for
dispute resolution and access to justice.
Holders of public office in Pakistan are largely able to break the law and engage in Prosecution of
corrupt practices with impunity. Mechanisms for accountability remain limited and office abuse
were further weakened in August 2022 when an amendment to the National 3
Accountability Ordinance restricted the National Accountability Bureau (NAB) to
only investigating cases of corruption involving sums of PKR 500 million or more.
Historically, the NAB and other accountability institutions have been used as tools of
political persecution. Anti-corruption was one of the pillars of the PTI’s electoral
campaign. Serving this goal, the NAB and the FIA were used to investigate, arrest
and prosecute opposition leaders, including Shahbaz Sharif, Miftah Ismail, Shahid
Khaqan Abbasi and Hamza Shahbaz, between 2018 and 2022. However,
significantly, no charges of corruption were ever proven in court. Since its ouster in
April 2022, the PTI’s leadership has been on the receiving end of similar campaigns.
Most prominently, former Prime Minister Imran Khan has been accused of corruption
for misappropriating gifts he received as head of state. The Election Commission of
Pakistan disqualified Khan from holding public office until 2023, and the case
continues to be investigated by the NAB. The PTI has also been embroiled in a case
related to funding it allegedly received from overseas, which violated the Elections
Act. As has been the case in the past, both of these instances are widely believed to
be no more than tools to persecute opposition politicians, with calls for accountability
failing to reflect genuine interest in systemic measures to tackle corruption at all
levels of government and across partisan political lines.
Torture and preventive detention remain a part of Pakistan’s policing and security Civil rights
landscape. In 2010, Pakistan ratified the Convention against Torture and Other Cruel, 3
Inhuman or Degrading Treatment or Punishment. Furthermore, in August 2022, the
National Assembly passed the Torture and Custodial Death (Prevention and
Punishment) Act, which criminalizes the use of torture. Nonetheless, torture remains
rampant in practice.
Citizens are subject to trial by military tribunals, empowered through vague anti-
terror laws that are wide-ranging in their application. Pakistan also continues to
witness the enforced disappearance of activists and individuals, who are allegedly
kidnapped by the military and intelligence agencies. While legal efforts continue to
be made to recover these missing people, attempts to hold the government
accountable for these acts have thus far foundered in the courts and in parliament,
mainly through standing committees and special commissions occupied with the
cases.
Ethnic minorities experience discrimination, particularly in Balochistan, where

ongoing military operations have seen an increase in surveillance and restrictions on
the freedom of movement of local people. The same was the case in the former
FATA, where rights abuses perpetrated during military operations against violent
Islamist groups underpinned the rise of the PTM.
Pakistan continues to witness discrimination against women and sexual minorities.

For example, homosexuality is criminalized, and the transgender community faces
increasing violence.
In terms of privacy and freedom of expression, laws like PECA continue to be used
by agencies such as the FIA to conduct far-reaching and often opaque investigations
into the activities of dissidents, activists and citizens.
4 | Stability of Democratic Institutions
In 2022, the Economist Intelligence Unit classified Pakistan as a “hybrid regime” in Performance of
its Democracy Index. Despite the existence of formally democratic institutions, such democratic
as regular national elections, political parties and a parliament, the country’s powerful institutions
military establishment exerts tremendous de facto power. In April 2022, the 3
military’s withdrawal of support for the PTI government resulted in an opportunity
for the opposition to successfully oust Prime Minister Imran Khan through a vote of
no confidence in the parliament. While the vote itself was constitutional, there is little
doubt that it would not have succeeded without the military’s tacit support.
While Pakistan’s next general elections are scheduled for the summer of 2023, there
is considerable uncertainty surrounding when they will actually be held. The PDM
government currently in power lacks electoral legitimacy, and the military continues
to play a key role in shaping governance in key areas, such as foreign policy and
economic management. These problems are compounded by the absence of effective
local governments, particularly in Punjab, where the local governments have been
dormant since 2019 (despite a constitutional requirement to elect and empower new
local governments). Historically, the federal and provincial governments have
hesitated to devolve power to the local level, and this remains the case even in areas
where local governments currently exist.
Lastly, the Supreme Court of Pakistan is seen as an increasingly partisan institution,

with individual judges increasingly associated with various political parties and
agendas. Historically, the Supreme Court played a role in legitimizing the military’s
interventions in politics. While it has arguably been able to carve out a more
independent role for itself since the ouster of General Musharraf in 2008, the period
under review has seen the court, headed by Chief Justice Umar Bandial, come to be
associated with partisan support for the PTI, following a string of legal decisions that
have been seen as favoring the PTI at the expense of its political rivals.
During the period under review, Pakistan witnessed a further increase in political Commitment to
polarization, which had already increased over the previous decade. Accusations of democratic
the military establishment’s involvement in rigging the 2018 general elections institutions
widened the gulf between the PTI and opposition parties, such as the PML-N and 3
PPP. This divide has only been deepened by the PTI’s ouster in April 2022. Indeed,
the PTI claimed that its removal from office was the result of an organized
conspiracy, in which the military establishment coordinated with the United States
and the PML-N. The party has since walked back parts of the claim. The PTI has
spent much of 2022 and 2023 protesting against the PDM and elements within the
military establishment, questioning the legitimacy of the government and institutions
like the Election Commission of Pakistan. Nonetheless, there is little evidence to
suggest that the military has withdrawn from the indirect role it has played in
Pakistan’s politics in recent years. While the PTI and other parties remain formally
committed to strengthening democracy, the possibility that they will maintain their
partnerships with the military persists.
5 | Political and Social Integration
Mainstream political parties in Pakistan are weak, lacking organizational capacity, Party system
internal democracy, clear ideological identities, and programmatic platforms based 4
on the aggregation and articulation of popular demands. Repeated periods of military
rule in Pakistan have impeded the development of the party system and fostered an
environment in which powerful local leaders are able to position themselves as viable
electoral candidates, by leveraging their economic and social resources, as well as
their connections to the state. This permits them to mobilize vote blocs through the
provision of patronage to clients in their constituencies. Particularly in the
countryside, electoral competition often involves little more than contests between
these entrenched local elites, as they defect from one party to another depending on
the broader political environment. Parties lack organizational roots in communities,
particularly in the absence of consistent local government elections. As a result,
dynastic politics remains the main point of entry into electoral politics in mainstream
parties.
Over the years, the party system in Pakistan has fragmented along provincial lines.
The PPP enjoys a virtual monopoly over politics in Sindh. An exception is the city of
Karachi, where it competes for influence with the MQM representing ethnic
Mohajirs, the religious Jamaat-i-Islami (JI) and, more recently, the PTI. In
Balochistan, electoral politics is dominated by ethno-national parties like the Baloch
National Party (BNP). Elections are more competitive in KP and Punjab. The PTI has
emerged as the dominant party in KP after displacing the Awami National Party
(ANP), and the PTI and PML-N enjoy roughly equal levels of support in Punjab.
Voter volatility is often determined by the shifting allegiances of local leaders
overseeing patronage networks. There, electoral choices are shaped more by alliances
between local leaders and various parties rather than by ethnic identity or religious
ideology.
In addition to these provincial/ethnic cleavages, religion remains a potent source of

political organization and polarization. Parties such as the JI and the JUI-F make
explicit appeals to Islam in their electoral platforms, while hard-line parties such as
the TLP have emerged as significant electoral players after campaigning on the
emotive issue of blasphemy.
In recent years, the emergence of a growing middle class and urbanization have
weakened the hold of traditional landed elites on electoral politics, with service
delivery and party performance increasingly influencing voter choice. Furthermore,
according to the Election Commission of Pakistan, an estimated 10 million new
voters will be eligible to vote in 2023, and voters aged 18 to 35 will comprise almost
half of the total electorate. This growth in younger voters has been accompanied by
the increasing importance of the internet and social media as tools for campaigning
and mobilizing political support.
Civil society in Pakistan is characterized by a variety of different interest groups. Interest groups
These include chambers of commerce and industry associations that represent 4
entrenched economic elites, politicized professional bodies (e.g., associations of
lawyers, doctors, journalists and teachers), non-governmental organizations engaged
in both service delivery and advocacy work and relatively marginal activist
organizations (e.g., student collectives and trade unions). Organizations based on
religious and ethnic identity can also be found, although religious organizations tend
to receive greater state support and patronage than ethnicity-based ones.
The power exercised by these different groups varies. Local traders’ associations,
present in markets across the country, remain a powerful source of urban electoral
support for parties like the PML-N and PTI. Professional associations, such as the
provincial bar associations and the Young Doctors Association, regularly mobilize
their members to engage in acts of protest and to negotiate concessions for their
members. Bar associations, in particular, have gained greater importance in recent
years due to the informal influence they wield when it comes to the appointment of
court judges. These groups have clientelist relationships with political parties, trading
support and street power for access to state patronage and the perks of high office.
Less powerful groups, such as organizations that represent workers, students and low-
level government employees, are often met with state repression and persecution
when they articulate their demands. Consequently, they rarely have their grievances
addressed through official action. Nonetheless, different interest groups also come
together to share platforms and campaign for collective goals. For example, events
such as the Student Solidarity March and the Aurat March have brought students,
women, trade union members and even members of political parties together in recent
years.
The limited polling that exists on the public perception of democracy in Pakistan Approval of
suggests that there is a lack of trust and faith in democratic institutions. According to democracy
the 2022 Democracy Perception Index, even though over 75% of Pakistanis believe n/a
democracy is important, only 50% believe the country is actually democratic, and
almost 40% believe the country needs more democracy. Furthermore, 73% of
Pakistanis believe there is foreign interference in the electoral process, and around
20% believe elections are not free and fair. Similarly, a poll conducted by Gallup
Pakistan in August 2022 suggested that people viewed the military more favorably
than the democratic government (81.5% to 51.5%) and gave the military a slight edge
in questions of governance. These findings are borne out by the World Values Survey.
In 2018, 41.2% of respondents said that the military taking power from an
incompetent government was an “essential” feature of democracy, and 93.2% of
respondents had confidence in the armed forces compared to just 43.6% who had
confidence in political parties. At present, there is no polling data available to suggest
whether or not public perceptions of the military have shifted, following allegations
the military engineered the ouster of the PTI government in April 2022.
In Pakistan, relationships of trust and reciprocity are underpinned by networks based Social capital
on family, kinship, and participation in charitable and other civil society associations. 4
According to the World Justice Project’s 2018 report on the Rule of Law in Pakistan,
73% of Pakistanis expressed a high level of trust in each other. Yet, these networks
also underpin clientelist political relationships, and often serve to reproduce local
social hierarchies defined by caste, class and gender. Similarly, even where
participation in civil society associations or NGOs (especially in response to disasters
such as the floods in 2022) provides a basis for the development of social capital, this
often happens piecemeal, with differential benefits accruing to groups and individuals
depending on the opportunities for participation available to them.
Apparently, high levels of interpersonal trust in Pakistan, at least within relatively

small networks of family and kinship, exist alongside considerable distrust and
suspicion of authority and groups outside immediate social circles. Thus, it can be
said that bonding social capital in Pakistan is high, while bridging social capital is
very low. Data collected by the World Values Survey in 2018 suggests that 93.4% of
Pakistanis somewhat or completely trust their families, and 77% somewhat or
completely trust people from their neighborhoods. Yet, the same survey found that
75.9% of respondents felt that they had to be “very careful” when deciding to trust
other people. Similarly, only 31.4% of respondents felt they could completely or
somewhat trust people belonging to different religious groups, and only 27.7% felt
the same way about other nationalities.
II. Economic Transformation
Question
6 | Level of Socioeconomic Development Score
In 2022, Pakistan declined seven places to rank 161st out of 192 countries on the Socioeconomic
UNDP’s Human Development Index. Pakistan’s low levels of socioeconomic barriers
development are accompanied by comparatively high levels of inequality. 3
Additionally, the World Bank reports that Pakistan’s Gini Index was around 30 for
2018. However, it is widely acknowledged that this figure may be inaccurate because
the wealthiest quintiles under-report their incomes in the relevant Household
Integrated Economic Surveys. Instead, as stated by the UNDP in its Human
Development Report for 2020, levels of inequality are demonstrated by the richest
1% of the population accounting for 9% of national income, while the poorest 1%
accounts for just 0.15%. Overall, the wealthiest 20% of the population accounts for
nearly 50% of national income, while the poorest 20% accounts for only 7%.
Furthermore, landowners, comprising only 1% of the population, own 22% of all
arable farmland.
In 2021, the government reported that nearly 21.9% of the population lived below the
national poverty line. However, the UNDP’s Multidimensional Poverty Index, which
measures deprivations in health, education and standards of living, estimated that, in
2022, 38.3% of the population was living in poverty, with an additional 12.9%
vulnerable to poverty. According to the World Bank, 39.84% of the population lives
below the lower middle-income poverty rate of $3.65 per day, and 84.53% of the
population lives below the upper middle-income poverty rate of $6.85 per day in
2022.
Inequality in Pakistan is exacerbated by several additional structural factors.

According to the Pakistan Institute of Development Economics, levels of poverty
vary from province to province: 16.3% in Punjab compared to 40.7% in Balochistan.
When comparing rural and urban areas, unemployment rates also differ, with a rate
of 27.6% in Punjab compared to 10.7% in Balochistan. Pakistan also faces significant
challenges in terms of its broader macroeconomic stability, considering the impact of
both COVID-19 and natural disasters, such as the record-breaking floods of 2022.
According to Relief Web, the poverty rate in Pakistan could increase by 2.5% to 4%
in the absence of meaningful assistance to the vulnerable communities hit hardest by
the flooding.
Gender-based inequality remains a significant structural burden on Pakistan’s

economy. According to the Gender Inequality Index, Pakistan scored just 0.534 in
2021. Additionally, in 2022, the Global Gender Gap Index ranked Pakistan 145th out
of 146 countries in terms of gender parity. This ranking highlights the persistent
exclusion of women from public life. Furthermore, Pakistan’s female labor force
participation rate was a mere 20.65% in 2021.
Economic indicators 2019 2020 2021 2022
GDP $M 320909.5 300425.6 348262.5 376532.8
GDP growth % 2.5 -1.3 6.5 6.2
Inflation (CPI) % 10.6 9.7 9.5 19.9
Unemployment % 4.8 6.6 6.3 6.4
Foreign direct investment % of GDP 0.7 0.7 0.6 0.4
Export growth % 13.2 1.5 6.5 8.4
Import growth % 7.6 -5.1 14.5 15.6
Current account balance $M -8557.9 -650.9 -12283.1 -12129.1
Public debt % of GDP 77.5 79.6 73.5 76.2
External debt $M 107882.9 115695.3 130433.1 -
Total debt service $M 11077.8 9877.1 12338.4 -
Net lending/borrowing % of GDP - - - -
Tax revenue % of GDP - - - -
Government consumption % of GDP 10.7 11.8 10.9 10.1
Public education spending % of GDP 2.2 2.1 1.7 2.0
Public health spending % of GDP 0.9 1.0 - -
R&D expenditure % of GDP 0.2 - 0.2 -
Military expenditure % of GDP 3.3 3.0 2.9 2.6
Sources (as of December 2023): The World Bank, World Development Indicators | International
Monetary Fund (IMF), World Economic Outlook | Stockholm International Peace Research Institute
(SIPRI), Military Expenditure Database.
7 | Organization of the Market and Competition
The regulatory environment in Pakistan is overseen by the Economic Coordination Market

Committee (ECC), a body chaired by the finance minister with representation from organization
the State Bank, the Securities and Exchange Commission, the Planning Commission, 3
and the Board of Investment. The ECC has broad powers to intervene in the economy,
often distorts price signals, and selectively favors certain enterprises and actors. In
the recent past, this has included approving large bailouts for failing state-owned
enterprises, such as Pakistan International Airlines, and the continued provision of
subsidies to powerful politically affiliated commercial interests, such as sugar
producers. The military also has commercial interests in Pakistan, so its enterprises,
such as the Frontier Works Organization, are often awarded lucrative contracts for
construction and other projects.
There are no formal restrictions on the ownership or operation of businesses by

foreign entities in Pakistan, with the exception of those based in India and Israel.
However, doing so can often involve dealing with significant bureaucratic hurdles
and corruption. The Securities and Exchange Commission of Pakistan (SECP)
registers and regulates local and foreign businesses, although the implementation of
its standards and regulations remains poor. While successive governments have
sought to encourage foreign investment in Pakistan, outward investment – meaning
Pakistanis investing abroad – is strictly regulated and discouraged.
Since 2018, the Pakistan Regulatory Modernization Initiative, under the Board of
Investment, has sought to introduce reforms to facilitate business transactions in
Pakistan by leveraging technology and reducing bureaucratic hurdles. These reforms
aim to improve the registration process for new businesses, facilitate property
acquisition and simplify tax payments. However, progress on implementing these
reforms has slowed in 2022 due to broader political and economic challenges.
Nevertheless, efforts to make improvements have not ceased.
Market competition in Pakistan is frequently distorted by seemingly arbitrary

decisions made by leaders for political reasons. Government policy, such as Finance
Minister Ishaq Dar’s decision in 2022 to artificially inflate the value of the rupee, can
introduce significant uncertainty into economic decision-making. At the local level,
district administrators retain the power to “fix” the prices of essential commodities.
The informal sector in Pakistan is large. According to the International Labour

Organization (ILO) in 2022, the informal sector accounts for 71.7% of non-
agricultural employment.
In 2019, Pakistan ranked 110th out of 141 countries in the World Economic Forum’s Competition policy
Global Competitiveness Report. The country’s Competition Commission is 4
empowered by the Competition Act of 2010 to investigate and take action against
monopolies, regulate mergers, prevent collusion aimed at distorting markets, and
penalize deceptive marketing practices. Pakistan is also a member of the International
Competition Network.
However, the CCP exercises very little regulatory power in practice. Pakistan’s
economy continues to be dominated by powerful rent-seeking actors who make use
of their economic clout and state connections to obtain preferential treatment,
including access to subsidies, tax relief and lucrative state contracts. According to the
UNDP in 2020, “elite privilege” of this kind amounted to $4.7 billion for the
corporate sector alone, with another $1.7 billion worth of privileges accruing to the
military’s commercial interests. Indeed, the military remains a powerful player in the
corporate sector, guarding interests in a range of areas, including cement, fertilizer,
real estate, construction, agriculture and dairy, among others. There is a lack of
transparency regarding the military’s economic affairs, which largely remain
impervious to external scrutiny.
In 2022, the CCP imposed penalties on both the Pakistan Poultry Association and the
Pakistan Sugar Mills Association for engaging in cartelization and collective price-
setting. As has been the case in the past, these penalties have been contested in the
courts, where the outcomes of these cases remain pending.
Pakistan has been gradually liberalizing trade over the past two decades. According Liberalization of
to the World Trade Organization, Pakistan had a simple average most favored nation foreign trade
(MFN) applied tariff of 11.2% in 2021, down from 11.6% in 2019 and 23.1% in 2000. 6
Nevertheless, these levels remain higher than those of other countries in South Asia
and well above the global average. The persistence of high tariffs on imports can be
attributed to a historical reliance on them as a revenue source, as well as a mechanism
to protect local producers from foreign competition. Pakistan also imposes nontariff
barriers to trade, often targeted at safeguarding the interests of rent-seekers in sectors
such as agriculture.
In 2022, the PDM government, in response to a growing current account deficit,

implemented stringent regulations on the importation of goods into Pakistan. Under
these regulations, commercial banks were required to obtain authorization from the
State Bank of Pakistan prior to engaging in any import transactions. These restrictions
applied to both essential and nonessential goods, which adversely impacted local
industries that relied on imported raw materials and machinery. The government’s
efforts to enhance exports were further impeded by its attempts to artificially inflate
the value of the rupee, a measure that violated the conditions imposed by the IMF in
exchange for financial assistance. However, in December 2022, the State Bank of
Pakistan lifted the import restrictions, and the rupee has also undergone depreciation
during the first half of 2023.
A 2020 report by the International Trade Centre notes that Pakistani exporters
struggle to comply with trade-related regulations or procedures in Pakistan and
abroad, often due to a lack of technical capacity for testing and product certification.
Exports are also hampered by red tape and documentation requirements within
Pakistan itself.
In the period under review, Pakistan was eventually removed from the Financial Banking system
Action Task Force (FATF) “grey list” in August 2022 after submitting documentary 7
evidence that it had taken action to rein in the financing of terrorism and control
money laundering. Pakistan had spent much of the previous decade on the FATF’s
watchlist, so exiting the grey list allows Pakistan to participate more fully in global
financial networks and meet the conditionalities imposed by the IMF.
The State Bank of Pakistan, which operates independently of the government, is the
main banking regulator in the country. Since the 1990s, in response to demands from
international financial institutions but also due to the State Bank’s own policy goals,
Pakistan has made significant progress in implementing the Basel Accords. Besides
the formal banking sector, there is the Pakistan Stock Exchange (PSX), a capital
market with 375 listed companies and a market capitalization of around $27 billion.
The period under review has witnessed a decline in the share of Pakistan’s
nonperforming bank loans, from 9.9% in September 2020 to 7.6% in September
2022. Moreover, the bank capital-to-assets ratio has also slightly decreased, from
5.8% in 2020 to 5.1% in 2021.
8 | Monetary and fiscal stability
During the period under review, Pakistan has experienced serious economic Monetary stability
challenges, including record levels of inflation and the looming threat of default. In 3
the space of a year, from March 2022 to March 2023, the rupee went from trading at
PKR 177 per U.S. dollar to PKR 260 per U.S. dollar, contributing to a rapid rise in
inflation. In January 2023, the State Bank of Pakistan estimated that the country’s
real effective exchange rate was 92.8. The change in the rupee’s value can be
attributed to several factors, but the primary factor is a balance-of-payments crisis
exacerbated by looming debt repayments, rising global fuel and commodity prices,
domestic political instability, and arguably misguided policy decisions aimed at
subsidizing the cost of petrol for consumers and unsuccessfully attempting to
artificially inflate the value of the rupee.
The significant devaluation of the rupee has had a profound impact on Pakistan’s
economy. In February 2023, Pakistan’s Consumer Price Index rose by 38.4%
compared to the previous year, marking the highest increase in decades. One of the
conditions set by the IMF in exchange for aid in 2022 and 2023 was to initiate a
decline in the value of the rupee. As a result of inflation, the State Bank of Pakistan
has consistently raised interest rates.
The economic crisis has also affected Pakistan’s activity in global trade. Restrictions
on imports resulted in a 32% decline in the trade deficit during the first half of the
2022/23 fiscal year. Additionally, exports experienced a 15.4% year-on-year decline
in January 2023.
The period under review has witnessed a steep deterioration of Pakistan’s fiscal Fiscal stability
position. Rising global fuel and commodity prices, high levels of debt repayment, 3
crippling floods and devastation, and domestic political instability have brought
Pakistan to the brink of default, with foreign currency reserves declining to just $3.2
billion in February 2023, down from $13.2 billion in December 2020. This is barely
sufficient to cover 20 days’ worth of imports. Austerity measures, such as restrictions
on imports, have reduced Pakistan’s current account deficit to just 0.2% in January
2023, a decline of 90% year-on-year. Nevertheless, Pakistan remains dependent on
external financial support in order to avoid default. In February 2023, Pakistan was
still negotiating with the IMF for the release of $1.1 billion in critical funding, which
had been part of a broader $6.5 billion package negotiated in 2019 that stalled due to
Pakistan’s noncompliance with IMF conditions. This is the 23rd time Pakistan has
turned to the IMF for financial assistance, more than any other country.
In recent years, Pakistan has been able to acquire funding from countries such as
China, Saudi Arabia and the UAE. However, securing external assistance has become
more challenging since 2022. In February 2023, Pakistan received $700 million from
the China Development Bank. Nevertheless, the country still faces significant
external financing needs.
Pakistan’s levels of debt have also continued to increase. According to the State Bank
of Pakistan, the country’s debt-to-GDP ratio reached 73.5% in 2022, up from 71.5%
in 2021. In 2022, total external debt amounted to nearly $89 billion, equivalent to
39.7% of GDP, compared to 34.5% in 2021. Pakistan’s ability to sustain this debt has
worsened during the period under review. External debt repayment obligations rose
from $8.4 billion in 2021 to $13 billion in 2022, and the country is projected to pay
$23 billion in debt servicing in 2023. By 2025, Pakistan is expected to make
repayments totaling $73 billion.
Despite efforts in recent years to boost revenues through greater documentation and
enforcement, the country’s tax-to-GDP ratio stood at just 9.2% in 2022. Efforts to
improve revenue collection continue to be impeded by difficulties in documenting
Pakistan’s large informal economy, as well as the constraints imposed by powerful,
organized interest groups (e.g., traders’ associations) and entrenched political elites.
9 | Private Property
The constitution of Pakistan protects private property rights, and laws exist to prevent Property rights
individuals and businesses from being deprived of their property by the state without 4
compensation. However, these laws are not always followed in practice. Poor
monitoring, patchy documentation and weak enforcement mechanisms mean that
individuals can be expropriated from their land by criminals, organized land-
grabbers, and corporate developers – all of whom often work in collusion with state
officials. While the threat of forcible expropriation remains real at the local level,
particularly for individuals lacking paperwork or without connections to the
bureaucracy that might validate claims to land, large-scale real estate and commercial
developments are also often based on fraudulent and illegal activities.
Military-run housing schemes across the country have been built on land forcibly
seized from the former inhabitants, and newer developments such as the Ravi Urban
Development project – designed to build new settlements along the river Ravi in the
city of Lahore – are proceeding despite environmental objections and the forcible
expropriation of local villagers from their homes. The often illegal and coercive
practices that characterize the seizure of land in Pakistan can be juxtaposed with the
demolition of informal settlements in Islamabad and Karachi in recent years, with
“anti-encroachment” drives launched by the government leading to protests by the
urban poor displaced amid these measures. Disputes over land ownership are among
the largest sources of litigation in Pakistan’s lower courts, with hundreds of thousands
of cases contributing to a judicial backlog compounded by inefficiency and
corruption. In 2022, Pakistan was ranked 108th out of 129 countries in the
International Property Rights Index.
Successive governments and all of Pakistan’s mainstream parties are committed to Private enterprise
promoting private enterprise. However, the economy’s institutional framework bears 6
the imprint of a long history of state intervention, coupled with rent-seeking by
entrenched elite interests.
State-owned enterprises continue to play a significant role in the Pakistani economy,
despite recent efforts to privatize them in order to enhance efficiency and financial
viability. However, privatization remains a sensitive topic in the political arena, partly
due to concerns about potential layoffs and because successive governments have
utilized employment in state-owned enterprises as a means to dispense patronage to
their supporters. According to data from the State Bank of Pakistan, public sector
enterprises were burdened with a debt equivalent to 12.7% of GDP as of September
2022, with annual losses exceeding PKR 130 billion. The PDM government, along
with its predecessors, has expressed a commitment to privatize state-owned
enterprises and, in 2023, actively sought buyers interested in acquiring a majority
stake in Pakistan International Airlines. Moreover, the government has enacted the
Inter-Governmental Commercial Transactions Act of 2022 to facilitate foreign
governments’ ability to purchase stakes in Pakistani state-owned enterprises.
10 | Welfare Regime
Pakistan has several welfare programs aimed at establishing a basic universal social Social safety nets
safety net for its citizens. Government-operated schools and hospitals offer highly 4
subsidized education and health care to the entire population. Additionally,
organizations such as Zakat and the Pakistan Bait-ul-Mal utilize tax revenues to
provide small cash transfers to approximately three million people throughout the
country. Pakistan also has a contributory pension scheme, called the Employee Old
Age Benefits Institution, which currently boasts over nine million enrolled
individuals. Furthermore, the government utilizes the Pakistan Poverty Alleviation
Fund to provide microfinance loans to its citizens. Through partnerships with NGOs
and other private sector organizations, this fund has disbursed PKR 237.56 billion in
loans between 2000 and 2022.
Nonetheless, the provision of effective public services in Pakistan is hamstrung by

serious capacity constraints. According to the Pakistan Economic Survey for 2022,
spending on health care amounted to 3% of GDP in 2020/2021 and spending on
education to 2.4% of GDP in the same year. The net enrollment rate for primary
school students stood at 67% in 2020/2021, and there was one doctor available for
every 877 Pakistanis in 2022. In 2019/2020, there were only 0.98 doctors per 1,000
people, and the primary school enrollment rate was 68% in 2018. The inadequacy of
public welfare services has led to the emergence of a large private sector in health
care and education. Historically, the budgetary adjustments required by lenders to
manage Pakistan’s fiscal constraints have led to cuts to social services. This is likely
to remain a characteristic of the country’s political economy in the future.
While significant challenges persist regarding the provision of welfare in Pakistan,

there are areas where progress has been observed. The Benazir Income Support
Programme (BISP), initiated in 2008, is an unconditional cash transfer scheme for
poverty reduction that primarily targets women. Renamed the Ehsaas program by the
PTI government, the BISP was expanded in response to the COVID-19 pandemic,
with coverage extended to an estimated 15 million families in 2021. During this
period, the Ehsaas Taleemi Wazaif Programme was also introduced, offering stipends
ranging from PKR 1,500 to PKR 4,000 to students every quarter. Currently, the
program benefits over three million children.
In 2019, the PTI government launched the Sehat Sahulat Programme in the KP
province, providing universal health insurance to citizens eligible for use in both
public and private hospitals. Coverage was extended to Punjab in 2021, and the
program was providing health insurance to an estimated 38 million households across
the country by the end of that year. While questions remain about its sustainability –
currently accounting for 30% of the government’s expenditure on health care – it
remains the most significant reform to health care provision in decades.
Although the constitution of Pakistan prohibits economic discrimination, as well as Equal opportunity
other forms of discrimination based on gender, religion or other identities, the country 3
continues to exhibit hierarchies based on class, gender, ethnicity, religion and caste.
Individuals from underprivileged and marginalized communities encounter
significant obstacles to upward social mobility, lacking access to high-quality
education, health care and economic opportunities.
The World Economic Forum’s Gender Gap Index ranked Pakistan 145th out of 146
countries for gender parity. This is reflected in discrepancies such as literacy rates,
with the male literacy rate at 73.4% compared to just 51.9% for women. The women’s
labor force participation rate has also remained stagnant at around 20% over the last
decade. While there are quotas of 17% representation for women in the national and
provincial legislatures, candidates selected for these seats do not contest elections and
are instead nominated by their parties – often based on familial connections. Women
remain excluded from the upper echelons of politics. For example, only five members
of Prime Minister Shahbaz Sharif’s 81-member cabinet are women.
Religious minorities encounter widespread discrimination in Pakistan, as do citizens

who belong to lower caste groups, notably former Hindu Dalits who have converted
to Islam. Christians, Hindus and lower-caste Muslims are disproportionately
employed in casual labor, sweeping, and sex work, and have limited opportunities for
upward social mobility. Although there are no legal obstacles to minority
participation in the economy de facto discrimination consigns them to subordinate
roles in society.
11 | Economic Performance
In 2022, Pakistan had a nominal GDP of $377.3 billion, with the economy expected Output strength
to grow at just 2% in 2022/2023. This signifies a decrease from a reported growth 3
rate of 5% in 2021/2022. The relatively low growth rate reflects the serious
macroeconomic challenges Pakistan has had to contend with, such as inflation and
the economic damage caused by widespread flooding – the total cost of the damage
and reconstruction is estimated to be around $30 billion. Pakistan’s fiscal deficit also
increased to almost 9% of GDP in 2022. While the current account deficit has been
significantly reduced over the course of the 2022/2023 financial year, the country
faces serious economic headwinds as a result of its continuing balance-of-payments
crisis. During this period of review, Pakistan received $3.06 billion in FDI in 2021
and $2.622 billion in 2022, with the decline reflecting Pakistan’s broader political
and economic challenges.
Pakistan’s per capita income increased from $1,505 in 2021 to $1,798 in 2022.
However, the country still lags behind both India and Bangladesh in this regard.
Inflation has remained high, reaching 25% in 2022 and rising to over 34% in January
and February 2023 following the rapid devaluation of the rupee. The government
reported an 11.5% increase in year-on-year revenue collection in November 2022,
although total revenue collection fell short of the annual target. The unemployment
rate also rose to 6.3% in 2021/2022.
12 | Sustainability
In 2022, the Environmental Performance Index ranked Pakistan 176th out of 180 Environmental
countries, indicating a seven-place decline from its 2020 ranking. Recently, major policy
cities in Pakistan have experienced a significant deterioration in air quality due to 3
vehicular traffic, crop burning, coal-burning power plants and construction, not only
within Pakistan but also in India and China. According to the 2022 Air Quality of
Life Index, Pakistan is the fourth-most polluted country globally. Air pollution
reduces the average Pakistani’s life expectancy by 4.3 years and even seven years in
the most polluted areas of the country. Despite the evident and obvious nature of this
problem, successive governments have shown little willingness or ability to develop
coherent frameworks to address the issue.
Per capita carbon dioxide emissions in Pakistan were just 0.99 tons in 2021, far below
the global average of 4.69 tons. However, despite this, Pakistan has repeatedly been
one of the states hardest hit by the implications of global climate change. In what has
become an almost annual occurrence, Pakistan experienced record-breaking flooding
in 2022. These floods affected 33 million people, covered over 12% of the country’s
area, resulted in nearly 2,000 deaths, displaced an additional 2.1 million people, and
pushed approximately five million people into poverty. The combined economic
losses and costs of reconstruction amount to an estimated $30 billion.
Pakistan’s Ministry of Climate Change is tasked with addressing environmental

issues, but there is limited evidence to suggest that it has had a significant influence
on policy. Although Sherry Rehman, the current minister for climate change,
achieved some success by highlighting the issue of climate reparations for countries
such as Pakistan at the COP27 conference in November 2022, there has been little
tangible progress resulting from this proposal.
In 2021, Pakistan scored just 0.342 on the UNDP’s Inequality-Adjusted Education Education policy /
Index, ranking it 156th out of 191 countries. On the Global Innovation Index, it was R&D
ranked 87th out of 132 countries, and 113th out of 132 countries in the field of human 3
capital and research. These indicators reflect Pakistan’s relatively low levels of
education expenditure, which have been well below the global average of 4% at just
2.4% of GDP in 2021. Additionally, the public education system is characterized by
inefficiency and a lack of resources. Pakistan also has a parallel system of private
education, which varies in quality and primarily benefits those who possess
significant economic and social capital.
Expenditures on research and development remain low in Pakistan, estimated at just

0.2% of GDP per year since 2017. The country produces more than half a million
college graduates annually, but the quality of their skills varies widely. Moreover,
Pakistan also produces several thousand PhDs each year, yet research output remains
insufficient and of relatively poor quality.
Governance
I. Level of Difficulty
Pakistan continues to face a number of structural constraints that impede its Structural
governance performance, with these challenges being exacerbated in 2022/2023 by constraints
ongoing political and economic crises. In addition to dealing with the prospect of 8
potential economic default induced by rising global fuel and commodity prices, high
levels of debt repayment, and poor economic planning, Pakistan must also contend
with high inflation, lackluster export performance, an economy that has struggled to
transition away from the production of agricultural goods and services, and the
persistent influence of a small, rent-seeking military and civilian elite that impedes
processes of reform. With 63% of the population aged between 15 and 33 in 2021,
Pakistan struggles to provide its young people with the skills, training and
opportunities required to fully participate in a changing global economic landscape.
The persistence of high levels of poverty and forms of discrimination suggests that
tens of millions are unlikely to experience much social mobility in the years ahead.
While there have been some recent attempts to reform and expand the provision of
welfare in Pakistan (e.g., through cash transfers and the provision of health
insurance), the country’s social indicators continue to lag behind those of similar
countries and growth in per capita income has been relatively slow.
In this context, Pakistan faces severe environmental challenges, ranging from poor
air quality to the impact of massive floods, with severe implications for the health
and well-being of its population. The United Nations considers populations to be
facing water scarcity when per capita availability dips below 1,000 cubic meters. In
2021, Pakistan fell below this threshold, with availability expected to fall to just 500
cubic meters by 2025. Matters are exacerbated by the fact that 97% of Pakistan’s
water is inefficiently employed for agriculture, resulting in up to 45% of this water
being wasted.
Pakistan’s governance is hampered by the persistence of discriminatory norms and

practices, some endorsed by law, that exclude and marginalize large sections of
society. Women experience widespread discrimination and violence in both the
public and private spheres, and reformation efforts are often stymied by the backlash
from more religious and conservative actors in society. Religious minorities,
particularly Ahmadis, experience de facto exclusion from the higher echelons of
government and the economy and are routinely subject to violence and intimidation.
Pakistan also has deep-rooted ethnic cleavages, with the economic and cultural
marginalization experienced by Balochis, Sindhis, and Pashtuns fueling ethno-
national movements and routine disputes over the division and allocation of national
resources.
In 2022, Pakistan witnessed considerable political instability, as yet another

democratically elected government was toppled and replaced, allegedly with the
interference of the country’s powerful military establishment. The resulting political
instability has arguably impeded democratization in Pakistan, as well as weakened
the development and consolidation of the country’s democratic institutions.
Civil society in Pakistan is characterized by the existence of a diverse array of Civil society
organizations and interest groups. These include NGOs; professional associations of traditions
lawyers, doctors and journalists; trade unions; industry groups representing 6
commercial interests; religious organizations; and social movements that mobilize
women, students, ethnic minorities and the country’s working classes.
The power enjoyed by these different civil society associations varies. Economic
elites benefit from their deep connections to the state, while religious groups have
benefited from the state’s historic reliance on Islam as a legitimating ideology. On
the other hand, social movements that voice dissent or opposition to the state or
entrenched interests, such as those of the military, are often met with repression and
persecution. Investigative agencies such as the FIA and laws such as PECA are
routinely used to harass and intimidate activists, while hundreds of individuals have
gone “missing” in Pakistan over the past two decades.
While recent years have seen a decline in levels of religious conflict and terrorism in Conflict intensity
Pakistan, there has been a gradual resurgence of violent extremist organizations (e.g., 8
the TTP, which has claimed responsibility for several high-profile attacks on law
enforcement personnel in 2022 and 2023) during the period under review. This is
arguably linked to the Taliban’s return to power in Afghanistan, making it likely that
Pakistan is to see a rise in levels of violence in the years ahead. According to the
South Asia Terrorism Portal, there were 424 incidents of terrorism with 214 civilian
deaths in 2021 and 630 such incidents in 2022 with 229 civilian deaths.
Political polarization has increased significantly as well, with supporters of the PTI
and the PML-N engaging in confrontations on social media, television and
occasionally even in public.
Religious minorities continue to face considerable violence and persecution in

Pakistan. For example, Shi’ite Muslims have been targeted by sectarian Islamist
groups aligned with the country’s Sunni majority. The issue of blasphemy remains
an emotive topic in Pakistan and has been used by groups such as the TLP to incite
violence against the government, and the country’s Ahmadi, Christian and Hindu
communities.
Pakistan experiences considerable ethnic strife. Historically, ethnic Baloch, Sindhis

and Pashtuns have protested the alleged economic and political dominance of
Punjabis, who control the state apparatus. This has resulted in the emergence of
ethno-national movements and insurgencies of varying intensity. At present,
movements such as the PTM continue to engage in non-violent opposition to the state
in KP and the former tribal areas, and militants associated with the Baloch Liberation
Army and other groups continue their long-running violent insurgency in
Balochistan.
II. Governance Performance
Question
14 | Steering Capability Score
The circumstances that led to the ouster of the PTI government in April 2022 provide Prioritization
an interesting insight into some of the reasons why governments in Pakistan struggle 3
to define and pursue long-term strategic priorities. Analyses of why the military
establishment may have chosen to move against the PTI have tended to focus on the
increasingly divergent interests of the two erstwhile partners. While the PTI, headed
by Imran Khan, sought to chart a foreign policy that uncoupled Pakistan from reliance
on the United States, the military reportedly wished to maintain that relationship. This
may have been attributable to its reliance on U.S. hardware. The PTI also sought to
exercise greater control over appointments within the military and other aspects of
domestic policy over which the military wielded considerable influence, including
holding politicians accountable for corruption.
The dissolution of the PTI government, and its replacement by the PDM, highlights
how strategic decision-making in Pakistan is often hampered by competing
institutional interests. The military establishment’s attempts to maintain its dominant
position within Pakistan have historically led to the weakening of the democratic
process; the events of 2022 are arguably a part of this pattern. The ouster of the PTI
government also derailed its attempts to pursue strategic objectives, such as holding
public officials accountable for corruption, which it subsequently claimed had been
thwarted by military opposition to these plans. Both the PTI and PDM resorted to
populist economic measures, such as subsidizing the cost of petrol, in the interests of
short-term electoral gain, despite the damage such measures did to the country’s
broader economic stability. Indeed, the PTI and PDM both fell afoul of the IMF as a
result of these decisions, resulting in the suspension of funds that were to be disbursed
to Pakistan as part of an aid package negotiated in 2019.
At present, amidst considerable political and economic turmoil, there is little

evidence to suggest that the government is in a position to outline a coherent set of
strategic objectives for Pakistan. Amidst the PDM government’s so-far inconclusive
attempts to stabilize the economy, as well as enduring uncertainty over when
elections that could empower a new government with a fresh mandate will be held,
there seems to be limited capacity to organize and prioritize policies moving forward.
When it comes to policy implementation, the PTI government and the PDM Implementation
government that has succeeded it have both been constrained by many of the 3
impediments that have hampered previous regimes. Traditional political elites, drawn
from the landowning and industrial classes, wield tremendous influence in parliament
and act as veto players to reform in areas such as taxation, even as they use their
influence to gain preferential access to economic opportunities. Furthermore, both
governments have been unable to engage in any meaningful bureaucratic reform.
While the PTI did convene a committee to chart a path forward for the process, its
recommendations were ignored, and the bureaucracy remains hampered by a lack of
capacity, nepotism and widespread corruption.
The government’s limited capacity to implement policy has impacted Pakistan’s
economic performance since 2022. While the country was able to emerge from
COVID-19 relatively unscathed compared to other countries around the world,
electoral imperatives led the PTI government to abandon fiscal discipline in
2021/2022 and provide costly subsidies to the electorate, such as for fuel. These
measures were continued by the PDM government, resulting in the suspension of an
IMF aid program negotiated in 2019 and the worsening of the balance-of-payments
crisis exacerbated by rising global fuel prices. In the absence of any meaningful
attempts to reform the Pakistani economy, such as taxing the country’s elite or
investing in innovation, both the PTI and PDM governments have simply repeated
the economic mistakes of their predecessors, relying on external financing to fuel
unsustainable consumption-led growth at home.
While the PTI was partly successful in expanding welfare provision, these gains have
been imperiled by Pakistan’s broader fiscal challenges. While the reform efforts of
the PDM government have arguably been motivated by a desire to fight for the party’s
political survival, there is abundant evidence to suggest that, as in the past, political
instability has little impact on the continued power and influence wielded by
traditional elites. Market manipulation by powerful actors in the sugar, cement,
pharmaceutical and poultry industries continues unabated, and the PDM government,
like the PTI before it, continues to provide incentives and support to elite interests
engaged in real estate speculation.
Political polarization acts as an impediment to policy implementation. In addition to
the tensions that have historically existed between provincial and federal
governments controlled by rival parties, the animosity between the PTI, PML-N and
PPP means that these parties have been unwilling to work together in parliament, and
continue to attack each other through the courts, accountability institutions and in the
media.
In recent years, successive governments have been able to harness the advice of Policy learning
experts, academics and consultants from donor institutions to develop innovative 4
welfare programs in Pakistan. The PTI had some success in expanding BISP during
its tenure and, building on ideas that had been circulating since 2006, pioneered the
Sehat Sahulat health insurance program. The PTI government also developed a
platform for facilitating digital payments in Pakistan and worked toward improving
the ease of doing business in the country.
However, outside of these areas of innovation, little improvement has been made to
develop and introduce new ideas in other areas of governance. Much of the country’s
politics and policymaking continue to be oriented toward the logic of clientelist
service provision overseen by traditional political elites who have emerged from the
propertied classes. The structure of the bureaucracy is relatively archaic and
inefficient, limiting the government’s ability to engage in flexible thinking and policy
learning.
15 | Resource Efficiency
In its budget for 2022/23, the government allocated 28.5% of total expenditure to the Efficient use of
military, civil administration (including salaries for government employees) and assets
pensions (including military pensions). A further 12.2% of the federal budget was 4
transferred to the provinces, out of which a significant percentage is generally spent
on running the provincial administrations. Of the remainder, 41.2% was allocated to
servicing debt, while investment in public infrastructure and development received
7.5%. Pakistan runs persistent fiscal deficits every year and remains reliant on
external financing to meet its expenditure targets. According to World Bank data for
2021, Pakistan held $130.43 billion in external debt stocks.
Given relatively high levels of corruption, as well as bloat due to the use of public
employment to provide state patronage, a considerable amount of government
expenditure on administration is wasted or poorly utilized. The military budget, for
example, is never debated or subject to parliamentary scrutiny, and a considerable
portion of it is used to fund perks and privileges for personnel in the armed forces. A
further 6.9% of the federal budget has been allocated for subsidies, many of which
are granted for political rather than economic reasons. In general, politically
motivated appointments in the public sector continue to take place, such as in the
judiciary or police, despite pledges by the PTI government to end this practice.
Other than the military budget, which remains impervious to scrutiny, the budgetary
process is relatively transparent in that the budgets are presented for parliamentary
debate. More often than not, however, the government’s ability to set economic
priorities is constrained by its commitments to donors such as the IMF. In February
2023, a supplementary finance bill was rushed through parliament with little to no
debate, simply because its passage was a prerequisite for unlocking additional IMF
funding.
Policymaking in Pakistan is shaped by the often contradictory imperatives of the Policy

different actors that exert influence on the political system. When formulating and coordination
implementing policies, the state has to mediate between the objectives of the 3
potentially divided federal and provincial governments, the military establishment,
entrenched industrial and landed elites with close connections to the corridors of
power, local politicians whose influence is dependent on their ability to act as
conduits to state patronage, public sector employees who remain an important
political constituency, and associations of traders and professionals who can mobilize
to pursue their interests. Mechanisms through which these competing interests can be
aggregated and mediated are largely absent in Pakistan, and – wherever they do exist
– they are often limited in their functionality. Instead, policymaking tends to be
relatively fragmented and ad hoc, reflecting the needs and interests of those who
happen to be in power, and often relies heavily on the continued presence and interest
of senior leaders and officials.
Institutions such as the Council of Common Interests and the Ministry of Inter-
Provincial Coordination exist to help formulate policies through consultation with
Pakistan’s federated units. Increasingly, however, these forums have been eschewed
in favor of centralized, unilateral decision-making by the federal government. Bodies
such as the Planning Commission and the Economic Coordination Committee
function as extensions of the executive rather than as a means through which to
coordinate policies involving different actors.
Pakistan’s main anti-corruption watchdog is the National Accountability Bureau Anti-corruption

(NAB), which was set up in 1999 through an ordinance passed by the dictator General policy
Musharraf. Operating in tandem with accountability courts headed by High Court 2
judges, the NAB has a mandate that covers the investigation of corruption by
government officials and financial misconduct involving private firms and
individuals. Over the years, it has been accused of pursuing a partisan political
agenda, targeting opposition politicians and persecuting individuals by involving
them in long-drawn-out investigations of alleged wrongdoing.
During its time in office, the PTI government, which had campaigned on an anti-
corruption platform, prosecuted opposition politicians such as Nawaz Sharif and
Shahbaz Sharif, incarcerating them and many of their allies as it tasked the NAB with
investigating corruption allegations. Ultimately, none of these cases were ever proven
in court and many were dropped after the PTI was removed from power, giving
credence to the idea that the NAB remains little more than a tool through which
governments engage in the persecution of their opponents. Similar to the PTI, the
PDM has made use of the NAB and other investigation agencies to initiate
proceedings against former Prime Minister Imran Khan, his wife and political leaders
such as former Punjab Chief Minister Usman Buzdar since coming to power. The
PDM government has amended the National Accountability Ordinance, curtailing the
NAB’s ability to investigate cases involving financial misconduct amounting to more
than PKR 500 million. The PDM government has limited the NAB’s powers to
surveil those suspected of corruption without their knowledge. While these changes
have been justified by claims to reduce the NAB’s abuse to settle political scores,
critics of the changes argue that the PDM government has greatly reduced the NAB’s
ability to investigate pending cases of corruption.
More generally, the workings of the state and its officials remain opaque and lack
transparency, especially with weak enforcement of existing right to information laws.
Matters such as public procurement are shaped by rent-seeking and nepotism, with
no formal mechanism that enables public scrutiny of the process through which
contracts are awarded. Spending by the state is generally subject to very little
oversight. This is particularly the case for projects involving the military, although
the PTI’s recent criticisms of the military’s involvement in politics have opened up
the possibility of military personnel being held accountable for their actions.
Legislators in Pakistan are expected to formally declare their assets before contesting
in elections. While this is generally complied with, declarations tend to be fraudulent
and misleading, and there is a lack of enforcement and investigation of legislators
and public officials who are suspected of possessing undeclared assets and income.
There are also no formal limits on campaign financing in Pakistan. Consequently,

electoral candidates tend to finance their own campaigns with no public disclosure or
audit of their spending.
16 | Consensus-Building
The period under review has been marked by increasing political polarization in Consensus on goals
Pakistan, exacerbated by the ouster of the PTI government in April 2022. Given that 4
the PTI had continually targeted its political opponents as being irredeemably corrupt,
it refused to work with them in parliament, preferring to govern with executive
ordinances while implicating rivals in corruption cases. This pattern has continued
since April 2022. Upon being removed from power, the PTI chose to boycott the
parliament and has taken to the streets to protest against the PDM government. In
doing so, it questioned the neutrality of institutions such as the ECP, repeatedly
criticized the military establishment for its interference in politics and has refused to
cooperate with the government in any meaningful way until its demand for fresh
elections has been met. In turn, the PDM government has leaned on the military
establishment to ensure its political survival while simultaneously engaging in the
persecution of the PTI.More broadly, repeated episodes of military intervention in
politics, the lackluster performance of democratic governments and popular
narratives of political corruption, which are often reinforced by the military and its
allies, have all contributed to the cultivation of ambivalent popular attitudes toward
democracy. For many citizens, the clientelist nature of service delivery often means
that electoral politics is about little more than entering into bargains with potential
patrons, while ideology and programmatic politics play a limited role in voter
mobilization. There is some evidence that repeated rounds of electoral competition
have induced parties in KP and Punjab to take the concerns of voters more seriously
and follow through with campaign promises that are subjected to more scrutiny than
before. However, it is yet to be seen if this translates into more substantive democratic
debates and practices.
All of Pakistan’s major parties agree in principle on the need for a market economy,
although their commitment to free markets is tempered by their acceptance of the
historical role the state has played in the Pakistani economy. Attempts to privatize
inefficient and unprofitable state-owned enterprises continue to flounder in the face
of political pressure exerted by public sector employees. Furthermore, powerful
interest groups continue to use their state connections to secure rents for themselves
through subsidies, government contracts and preferential policies. Elite capture of the
economy and its regulatory mechanisms can be seen in how subsidies and other
privileges (e.g., tax breaks) flowing to the propertied elite consume $17.4 billion
every year, according to the UNDP. The military is a powerful economic actor in
Pakistan with a wide scope of commercial interests in areas including construction,
real estate and agriculture, often using its political muscle to distort the market in its
favor.
Pakistan has had three instances of direct military rule since becoming independent Anti-democratic
in 1947, with the latest such episode ending in 2008. Even during periods of actors
democratic rule, however, the military exercises tremendous power from behind the 3
scenes, with Pakistan being classified as a “hybrid” regime by the Economist
Intelligence Unit’s Democracy Index. The ouster of the PTI government in April
2022, while engineered through a vote of no confidence in the parliament, was
arguably made possible by the military establishment’s withdrawal of support for the
party. Since then, the PTI has been openly critical of the military, accusing former
army chief General Qamar Bajwa of conspiring with the United States and local
opposition parties to topple the PTI government.
While the PTI’s attacks on the military have opened the possibility of a wider debate
on the role the military has historically played in undermining democracy, there is
little evidence to suggest this is likely to happen in the near future. A new military
leadership, headed by General Asim Munir, has remained relatively insulated from
criticism and appears to be working with the PDM government to pursue its political
and economic goals.
Historically, there have been periods in which the power of the military establishment
has been challenged, such as when military dictators were ousted in 1968, 1988 and
2007. In these instances, social movements involving student unions, workers and
leftist political parties played a key role in mobilizing support for democratic reform.
However, while actors such as these remain committed to democracy in the
contemporary era, with organizations such as the Haqooq-e-Khalq Movement, the
Democratic Students Committee and the Women’s Action Forum continuing to
oppose authoritarianism, their ability to influence politics remains relatively limited.
In 2022, the Global Terrorism Index ranked Pakistan the 10th most affected country Cleavage /
by terrorism, a slight improvement over its position in 2020 when it ranked 7th. conflict
Nonetheless, there has been a gradual uptick in terrorist violence in the period under management
review, as the resurgent Taliban government in Afghanistan has arguably facilitated 3
the conditions for militant groups (e.g., the TTP) to reorganize in Pakistan’s
northwest. According to the South Asia Terrorism Portal, there were 424 incidents of
terrorism with 214 civilian deaths in 2021 and 630 such incidents in 2022 with 229
civilian deaths.
The prospect of renewed terrorist violence in Pakistan, reminiscent of the period

between 2008 and 2018, has reignited debates over the role played by the military
establishment and the PTI in facilitating the return of groups such as the TTP. The
military establishment has long supported the prospect of a Taliban government in
Afghanistan, with the former head of the ISI, General Faiz Hameed, being one of the
first foreign dignitaries to visit the new government after their takeover. At the same
time, former Prime Minister Imran Khan has often been accused of being sympathetic
to the Taliban, claiming they “broke the shackles of slavery” by defeating the United
States and expressing support for resettling former TTP militants in parts of
Pakistan’s former tribal areas.
The removal of the PTI government has further entrenched political cleavages,
limiting the ability and willingness of political actors to build consensus across party
lines.
Ethnic identity remains a salient cleavage within Pakistan and has been a source of
considerable conflict throughout Pakistan’s history. In KP, the PTM continues to
rally support for a non-violent movement that seeks to hold the state accountable for
the deaths and disappearances that have accompanied anti-terror operations in the
former tribal areas. In Balochistan, groups such as the BLA continue to wage an
armed campaign against the state in response to allegations of deprivation and
marginalization. For their part, the government and military establishment have done
little to defuse these tensions, preferring instead to repress the supporters of these
movements, to arrest and persecute their activists, and to accuse them of being
supported by foreign actors working against Pakistan’s national interests.
The ability of civil society actors to influence the government and political leadership Public
varies, depending on the nature of the organizations involved. Those representing consultation
economic elites, such as associations of industrialists and traders, and those working 3
with international donor organizations, are closely connected to policymaking and
have been able to influence the government regarding questions on a potential
taxation reform and the provision of subsidies. Similarly, the state’s historical
reliance on Islam as a legitimating ideology and source of identity has allowed
Islamist parties and organizations to play an agenda-setting role, impeding reform in
areas such as women’s rights and inducing the government to abstain from action
aimed at reducing levels of discrimination and violence against religious minorities.
Professional associations of lawyers and doctors do not have as much influence on

policymaking but have been able to use their organizational power to hold strikes,
mobilize protests and wrest some concessions from the government.
As in the past, the period under review has witnessed the continued persecution and
repression of activists and movements critical of the government and military
establishment. While Pakistan has an often-combative media landscape, recent years
have seen successive governments attempt to impose formal and informal curbs on
the media by harassing journalists, making use of the PTA to discipline media outlets,
and employing social media to disseminate propaganda and stifle dissent online. Both
the PTI and PDM governments have engaged in these repressive measures, with the
mysterious murder of journalist Arshad Sharif in Kenya in October 2022 being the
most recent high-profile example of the dangers inherent to journalism in Pakistan.
Pakistan’s political leadership remains inimical to the idea of fostering reconciliation Reconciliation
between the victims and perpetrators of past injustices. Discussions of the widespread 4
atrocities committed by the Pakistani military during the secession of Bangladesh in
1971 remain absent from the public discourse, with a conference on this subject that
was scheduled to be held at the Lahore University of Management Sciences in March
2021 canceled. The PDM frequently refers to the PTI’s Imran Khan as “Imran Niazi”
in an attempt to link him to General Niazi, who signed the documents of surrender in
1971. This suggests that historical reappraisal is not only absent in society but is also
undermined by political actors.
Similarly, there is very little, if any, mention of the casualties of the military’s
campaigns against ethno-national movements in Balochistan in the 1970s and 2000s,
Sindh in the 1980s, Karachi in the 1990s, and Khyber Pakhtunkhwa (KPK) in the
2010s.
17 | International Cooperation
Since securing independence in 1947, successive Pakistani governments have Effective use of
committed to developing Pakistan’s economy through industrialization, while also support
providing welfare to its citizens. However, achieving these goals has proven to be 4
difficult in practice. Pakistan remains reliant on large amounts of external assistance
to fund its persistent fiscal deficits. It has turned to the IMF for bailouts on 23 separate
occasions and is currently negotiating with the donor agency for the release of funds
as part of a $6.5 billion aid package agreed upon in 2019. In recent years, Pakistan
has also received billions of U.S. dollars in bilateral aid from countries such as China,
Saudi Arabia and the UAE.
IMF aid to Pakistan has always been associated with strict economic requirements,
and conditions focused on liberalizing the economy and implementing broad fiscal
reform. Historically, governments have struggled to meet these conditions, often due
to the pervasive influence of elite interests that have resisted efforts to broaden
taxation, reduce rent-seeking and eliminate market distortions. Political

considerations have also played a role. In the period under review, both the PTI and
PDM governments chose to subsidize petrol, despite rising international prices, as
part of misguided attempts to curry approval among the electorate. The absence of
broader structural reform and the persistence of wide fiscal deficits have meant that
successive governments inevitably end up returning to external donors without a
sustainable, long-term development strategy.
The period under review has seen Pakistan experience a serious balance-of-payments
crisis at a time when traditional bilateral lenders, such as China and the Gulf
monarchies, have been reluctant to extend assistance to the country. This is partly a
reflection of their own economic constraints but also a result of Pakistan’s arguably
muddled attempts to balance its relationship with geopolitical rivals such as China
and the United States.
Pakistan’s international reputation and credibility are still damaged but have Credibility
improved in recent years. In the period under review, Pakistan was eventually 4
removed from the FATF’s grey list in October 2022 after a decade of scrutiny related
to Pakistan’s lax approach to regulating money-laundering and terror financing.
While the FATF continues to monitor the situation in Pakistan, the country’s removal
from the watchlist is a positive development in terms of its international credibility.
While Pakistan is a signatory to numerous international treaties, it often lacks the

domestic reforms necessary to comply with its international commitments.
Nonetheless, there has been some small progress in a few areas. For example, the
passage of the Torture and Custodial Death (Prevention and Punishment) Act in 2022
has finally brought Pakistan into compliance with its obligations under the
Convention against Torture and Other Cruel, Inhuman, or Degrading Treatment or
Punishment, which Pakistan signed in 2010.
In 2019, Pakistan’s international credibility was damaged after the World Bank’s
Center for Settlement of Investment Disputes awarded the Tethyan Copper Company
(TCC) $6 billion in damages after the Pakistan government terminated a contract that
had given it the right to extract copper from the Reko Diq copper mines. However,
the TCC – the shares of which in Reko Diq are now owned by a Canadian company,
Barrick Gold – managed to reach an out-of-court settlement with the Pakistani
government in 2022 after renegotiating their contract. This negotiation was given
legal cover by the Foreign Investment (Promotion and Protection) Bill of 2022, which
was passed to protect foreign investors such as Barrick Gold from the kind of judicial
scrutiny that led to the TCC’s contract being canceled in the first place. While this
raises questions about the transparency of foreign investments in Pakistan going
forward, the years of negotiation that went into resolving the dispute, and the legal
measures taken to prevent similar issues from arising in the future, will boost
Pakistan’s international credibility.
Pakistan played a crucial role at COP27, in its role as president of the G-77, in
negotiating for a loss and damage fund for countries at the frontline of climate change
impacts. The commitment to lobbying for the fund came in the wake of devastating
floods in 2022.
Perhaps more significantly, however, Pakistan reneged on commitments made to the

IMF when both the PTI and PDM governments chose to subsidize the cost of petrol
and artificially inflate the value of the rupee in 2022. While these decisions were
driven by political and electoral considerations, they worsened Pakistan’s balance-
of-payments crisis and led to the IMF freezing the disbursement of aid to the
government.
Pakistan’s relations with India remain largely frozen, following India’s 2019 Regional
incorporation of the disputed territory of Kashmir as a “union territory.” Pakistan cooperation
continues to highlight India’s worsening human rights record at international forums 4
and cross-border communication between the two countries, including cultural and
sports exchanges, remains limited.
In 2021, the Taliban returned to power in Afghanistan following the withdrawal of

the United States from the country. Pakistan, which had been accused of supporting
the Taliban, quickly recognized the new regime and maintains close ties with it,
providing it with aid and assistance, and advocating for it at international forums. The
Taliban’s return has also had implications for Pakistan’s internal security. While
Pakistan’s military establishment has long viewed the Taliban as a source of strategic
support against rivals such as India, the ideological affinity the Taliban have for
groups such as the TTP has helped the latter to regroup and mount attacks in Pakistan.
This remains an ongoing point of contention between Pakistan and Afghanistan.
Pakistan continues to maintain close ties with China, relying on it for economic,
military and diplomatic assistance. Pakistan is still working with China on the China-
Pakistan Economic Corridor. However, concerns over project costs and the terms of
financing have led to a slowdown in the pace at which it is now being undertaken.
Pakistan remains a member of regional and international organizations, including the

South Asian Association for Regional Cooperation (SAARC) and the Organization
of the Islamic Conference (OIC). However, its participation in these forums has been
shaped in recent years by the conflict with India.
Strategic Outlook
At the start of 2023, Pakistan faces a number of difficult challenges. The government has begun
implementing measures to comply with the conditions attached to the desperately needed
International Monetary Fund (IMF) bailout. However, these policies are likely to have a rapid and
significant impact on a population already reeling from the effects of record flooding, COVID-19
and political instability. Double-digit inflation, which reached 34% in January 2023, was an
inevitable consequence of the rapid devaluation of the rupee. Furthermore, additional measures
aimed at increasing revenue – such as a 1% increase in the general sales tax, and the imposition of
punitive taxes on a range of goods and services – will likely lead to a difficult period of adjustment
for the vast majority of Pakistanis living in poverty or close to it.
At the same time, there is little evidence to suggest that either the Pakistan Democratic Movement
(PDM) or the Pakistan Tehreek-e-Insaf (PTI) have developed meaningful plans for structurally
reforming the economy, despite IMF demands. Politically connected economic elites and
institutions, such as the military, which have their own commercial interests, continue to influence
policymaking. Thus, regardless of which government emerges from the 2023 elections, the cycle
of economic crisis that has characterized much of Pakistan’s history is likely to be repeated.
Political polarization in Pakistan is likely to worsen in 2023 as the antagonism between the PTI
and the PDM deepens. It could be argued that free and fair elections represent the best mechanism
through which to bring some stability to the country’s politics. While elections are formally
scheduled for August 2023, questions remain over the extent to which the integrity of the electoral
process can be ensured and whether they will even be held in a timely manner. Matters are further
complicated by the PTI’s decision to directly name and confront the military establishment for its
involvement in politics. Although this is a necessary step toward deepening democratization in
Pakistan, it risks provoking an even greater military pushback that would ultimately undermine
the democratic process. This risk is especially prominent given that factions within both the PDM
and PTI remain willing to work with the military establishment to secure their political interests.
Finally, even as the country grapples with the need to provide welfare and economic opportunities
to a young population marked by poverty, and divided along ethnic and religious lines, Pakistan
will have to contend with the mounting challenges posed by climate change and environmental
degradation. In particular, the country will have to devise strategies for dealing with the looming
threat of water scarcity, toxic levels of air pollution and the effects of climate change-induced
natural disasters, such as flooding. While these issues have not appeared to be a significant priority
for successive governments, they will ultimately require Pakistan to work with its neighbors to
address shared concerns over water and air quality. Pakistan will have to build on the initial steps
taken at COP27 to lobby for climate reparations, working to acquire and effectively use aid from
the Global North to mitigate the effects of climate change.

Country Report 2024 PAK

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BTI 2024 Country Report

Population M 235.8 HDI 0.544 GDP p.c., PPP $ 6437

Life expectancy years 66.1 UN Education Index 0.392 Poverty3 % 39.8

History and Characteristics of Transformation

Parts of the country lack communication and transport infrastructure, depriving

Pakistan’s ability to deliver public services at the local level continues to be

Pakistan’s military establishment continues to exercise a tremendous amount of Effective power to

In a 2022 report on legislative performance in Pakistan, the Pakistan Institute of

At lower levels, the judiciary continues to be characterized by a lack of resources,

Ethnic minorities experience discrimination, particularly in Balochistan, where

Pakistan continues to witness discrimination against women and sexual minorities.

4 | Stability of Democratic Institutions

Lastly, the Supreme Court of Pakistan is seen as an increasingly partisan institution,

5 | Political and Social Integration

In addition to these provincial/ethnic cleavages, religion remains a potent source of

Apparently, high levels of interpersonal trust in Pakistan, at least within relatively

II. Economic Transformation

Inequality in Pakistan is exacerbated by several additional structural factors.

Gender-based inequality remains a significant structural burden on Pakistan’s

Economic indicators 2019 2020 2021 2022

GDP $M 320909.5 300425.6 348262.5 376532.8

GDP growth % 2.5 -1.3 6.5 6.2

Inflation (CPI) % 10.6 9.7 9.5 19.9

Unemployment % 4.8 6.6 6.3 6.4

Foreign direct investment % of GDP 0.7 0.7 0.6 0.4

Export growth % 13.2 1.5 6.5 8.4

Import growth % 7.6 -5.1 14.5 15.6

Current account balance $M -8557.9 -650.9 -12283.1 -12129.1

Public debt % of GDP 77.5 79.6 73.5 76.2

External debt $M 107882.9 115695.3 130433.1 -

Total debt service $M 11077.8 9877.1 12338.4 -

Net lending/borrowing % of GDP - - - -

Tax revenue % of GDP - - - -

Government consumption % of GDP 10.7 11.8 10.9 10.1

Public education spending % of GDP 2.2 2.1 1.7 2.0

Public health spending % of GDP 0.9 1.0 - -

R&D expenditure % of GDP 0.2 - 0.2 -

Military expenditure % of GDP 3.3 3.0 2.9 2.6

7 | Organization of the Market and Competition

The regulatory environment in Pakistan is overseen by the Economic Coordination Market

There are no formal restrictions on the ownership or operation of businesses by

Market competition in Pakistan is frequently distorted by seemingly arbitrary

The informal sector in Pakistan is large. According to the International Labour

In 2022, the PDM government, in response to a growing current account deficit,

8 | Monetary and fiscal stability

Nonetheless, the provision of effective public services in Pakistan is hamstrung by

While significant challenges persist regarding the provision of welfare in Pakistan,

Religious minorities encounter widespread discrimination in Pakistan, as do citizens

Pakistan’s Ministry of Climate Change is tasked with addressing environmental

Expenditures on research and development remain low in Pakistan, estimated at just

Pakistan’s governance is hampered by the persistence of discriminatory norms and

In 2022, Pakistan witnessed considerable political instability, as yet another

Religious minorities continue to face considerable violence and persecution in

Pakistan experiences considerable ethnic strife. Historically, ethnic Baloch, Sindhis

II. Governance Performance

At present, amidst considerable political and economic turmoil, there is little

Policymaking in Pakistan is shaped by the often contradictory imperatives of the Policy

Pakistan’s main anti-corruption watchdog is the National Accountability Bureau Anti-corruption

There are also no formal limits on campaign financing in Pakistan. Consequently,