People save only 6 rupees out of every 100 rupees earned; PIDE urges to boost national savings
ISLAMABAD:
Pakistan’s savings rate has fallen to its lowest level in three decades, with citizens now saving just Rs 6 for every 100 they earn, according to a new report by the Pakistan Institute of Development Economics (PIDE).
The report warns that the persistently low savings rate could deepen the country’s investment crisis and continue pushing the economy into external debt and repeated programs with the International Monetary Fund (IMF).
In its recommendations for the federal budget for fiscal year 2026-27, PIDE called for launching a national savings campaign and proposed a series of measures aimed at encouraging long-term savings and improving financial security.
The expert group recommended restoring tax incentives for long-term savings plans, protecting small savers, expanding digital access to domestic savings products, and establishing an annual savings mobilization dashboard to monitor progress.
According to the report, Pakistan’s savings rate currently stands at 6.4 percent, significantly lower than that of comparable regional economies. Bangladesh has a savings rate of 21 percent, India 28 percent and Vietnam almost 30 percent.
The PIDE noted that high inflation and low returns on savings have discouraged people from depositing money in banks. Instead, many are increasingly turning to gold, real estate and cash holdings as preferred stores of value.
The report states that the low savings rate is undermining domestic investment and limiting the capital available for economic growth.
He also noted that excessive government borrowing is crowding out private sector investment, further weakening the country’s ability to generate sustainable growth.
“Pakistanis are saving just Rs 6 out of every Rs 100 of income,” the report observes, warning that the trend could make the economy increasingly dependent on loans and external financial assistance.
The PIDE urged the government to include measures in the next budget to reverse the decline in household savings and strengthen the country’s domestic resource base.
Among its proposals were special savings incentives for women, pensioners and workers employed in the informal sector, as well as additional safeguards for small savers.
The report also recommended improving the accessibility of domestic savings products through digital platforms to encourage broader participation in formal savings plans.
Emphasizing the need for structural reforms, the PIDE stated that the existing model of financing future growth through borrowed resources was no longer sustainable.
