Dwindling savings

A report by Pakistan Institute of Development Economics (PIDE) has sounded a warning that should concern everybody: Pakistanis are now saving only Rs6 out of every Rs100 they earn, the lowest level in three decades. This is not just a statistic, it is a stark reflection of the financial squeeze faced by the common man. While countries like India, Bangladesh and Vietnam boast savings rates of 28, 21 and nearly 30 per cent respectively, our households are barely able to set aside anything for the future. The reasons behind this are painfully visible in everyday life. Utility tariffs, skyrocketing school fees and other essential expenditures leave little room for families to save. When day-to-day survival consumes almost all of a household’s income, it is no surprise that formal savings have plummeted. Low savings carry deep consequences for the economy. When households cannot save, domestic investment suffers. Businesses find it harder to access capital and the economy increasingly relies on foreign loans to fill the gap. Excessive government borrowing, in turn, crowds out private investment, creating a vicious cycle of dependency that threatens long-term economic stability. Without a strong domestic resource base, sustainable growth remains a distant dream. PIDE’s recommendations are therefore not just technical, they are urgent social imperatives. Measures such as restoring tax incentives for long-term savings, providing special safeguards for small savers and expanding digital access to national savings products can make a tangible difference. Incentives targeted at women, pensioners and workers in the informal sector could further broaden participation in formal savings schemes. Most importantly, easing the financial burden on ordinary families through rationalized utility tariffs, affordable education and manageable living costs is critical to enabling them to save for the future. We cannot hope to catch up with regional peers without addressing the root causes o