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Pakistan's Fragmented Authority Cripples Economy Despite Mineral Wealth

An article in The News International details how Pakistan's fragmented decision-making authority prevents it from exploiting rich deposits of copper, gold, and rare earth minerals for economic growth. The power sector is paralyzed by massive circular debt exceeding Rs 3 trillion, despite installed capacity far exceeding peak demand. Foreign investors are deterred by unenforced contracts, lengthy arbitration, and contradictory regulatory actions, while a growing young population fails to become a demographic dividend due to misaligned education and skills training. Ultimately, the report concludes that IMF programs cannot fix these deep-rooted issues of jurisdictional overlap, slow decisions, and a complete lack of execution accountability.

Key Points: Pakistan's Economic Crisis: Fragmented Decisions Halt Growth

  • Fragmented authority blocks mining
  • Power sector crippled by circular debt
  • Judicial delays scare investors
  • Demographic dividend wasted by skills mismatch
  • IMF programs can't fix command failures
2 min read

Lack of clear decision-making crippling Pakistan's economy: Report

Report reveals how fragmented authority, reversible decisions, and lack of accountability are crippling Pakistan's economy despite rich mineral deposits.

"Liabilities are centralised; accountability is diffused which, too, is command failure - The News International"

New Delhi, Jan 19

While Pakistan has rich deposits of copper, gold, antimony and rare earth elements, it has not been able to tap these resources for economic growth as the economic decision making authority is fragmented, decisions are reversible, and accountability is absent, according to an article in The News International.

The article highlights that despite the abundance of these expensive minerals Pakistan has not been able to exploit them as there is no single authority that can give the go-ahead for mining. While a federal-provincial overlap fragments decisions in the country, courts also tend to freeze permits.

Regarding the power sector, the article highlights that Pakistan has around 46,000 MW of installed electricity capacity. Pakistan's peak electricity demand is around 28,000-30,000 MW. Electricity tariff has gone up from Rs 20 per kWh range in 2020 to Rs 40 per kWh in 2025. Yet the lights still go out. It further states that this is due to the circular debt crossing Rs3 trillion. State-owned discoms post annual losses of Rs 500 billion. Total outstanding payments owed to IPPs are around Rs 1.2 trillion.

The article claims that while foreign investors says Pakistan's returns are good, they lament that contracts are not enforced on time; arbitration drags on for years; courts issue ex-post stay orders; and regulators contradict ministries.

It also highlights that 64 per cent of Pakistanis are under 30. Pakistan's working-age population (15-64) is expanding by about two million people every year.

"Yes, the demographic dividend exists. Yes, the private sector wants skills," the article says.

It states that yet the dividend is not materialising because the curriculum is disconnected from labour demand; provinces and centre are misaligned; there is no national skills command; and there is no execution accountability. Labour markets are signalling demand but the state is not responding, the article states.

It further points out that IMF programmes can fix these problems as they operate through prices, taxes, subsidies and accounting identities. They do not fix decision speed, jurisdictional overlap or federal-provincial command. Then there is the missing budgetary command. Provinces spend; the centre borrows. Liabilities are centralised; accountability is diffused which, too, is command failure, said the article.

- IANS

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Reader Comments

P
Priya S
The part about the demographic dividend is so sad. So many young people, so much potential, all going to waste because the education system isn't aligned with what the job market needs. We see similar issues in some Indian states, but thankfully the Skill India mission is trying to bridge that gap. Hope they can learn and implement something similar.
R
Rohit P
Rs 40 per kWh and still load-shedding? 😳 That's insane! In Delhi, we complain about bills, but at least the power is mostly reliable. This report shows the problem isn't lack of capacity, but terrible management and that circular debt monster. No foreign investor will touch that with a ten-foot pole.
S
Sarah B
Living here, you see news about tensions, but articles like this remind you that the biggest enemy for ordinary Pakistanis is their own system's dysfunction. The federal-provincial blame game sounds familiar. Hope they find a way forward for the sake of the people suffering.
V
Vikram M
"Provinces spend; the centre borrows." This is the root of the fiscal problem. Without clear accountability, there is no responsibility. It's a tough lesson for any nation. India's Finance Commission tries to address this balance. Their situation is a cautionary tale for all developing countries.
K
Karthik V
While the analysis seems spot on, we must be careful not to sound gleeful about a neighbour's troubles. A stable and prosperous Pakistan is better for the entire subcontinent's trade and security. This report, if taken seriously in Islamabad, could be a first step towards much-needed reforms.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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