Published May 25, 2026 Updated about 2 hours ago By Asad Rizvi The foremost challenge confronting our economic leaders as they develop a budget for a nation heavily burdened by debt and reliant on foreign loans for many decades is how to effectively formulate the budget. Emerging economies like ours continually face this daunting task, with establishing a balanced budget that ensures future financial stability being the central issue. These countries experience persistent refinancing problems, worsened by sluggish economic performance characterised by lacklustre export growth, rising import costs, and alarmingly low tax revenues, all creating complications for financing deficits. As a result, they are forced to take on new loans to service maturing debts and interest payments while frequently rolling over existing obligations. A significant obstacle is securing the necessary financing and managing the costs associated with it, which are intensified by rising global inflation and high interest rates. Poor credit ratings make borrowings more expensive and increasing the risk of currency depreciation, which, in turn, increases the burden on the domestic currency during times of uncontrollable inflation that lead to sharp increases in policy rates. This situation often drives excessive money printing and a considerable amount directed toward government expenditures to bridge deficits. To effectively tackle these problems, it is crucial to pinpoint and correct the root causes. Pakistan’s tax-to-GDP ratio has stagnated at around 10 percent, significantly lower than the Asia-Pacific average of 19 percent. Occasional increases of 1 percent to 2 percent through adjustments serve only as temporary measures, and without sustained growth, they won’t be sufficient. We have seen sudden shifts through adjustments in the advance to deposit ratio (ADR) of commercial banks over the past year, which has risen sharply without any real benefits to the economy, as this growth has not been reflected in GDP figures. Establishing a target tax-to-GDP ratio of 15 percent by FY2028-29 should be our key objective. Additionally, we need to confront the significant burdens of debt and…