For a country like Pakistan, which relies heavily on foreign borrowing, preparing a national budget becomes even more complicated. Policymakers face a balancing act, managing liquidity in the face of debt maturities, rollovers, and mounting interest payments, while also attempting to carve out space for growth, infrastructure investment, and social welfare initiatives. Pakistan’s vulnerability to external shocks further complicates it. Internally, tax evasion and a significant informal economy hinder revenue collection. The tax-to-GDP ratio remains low, and without broadening the tax base, no level of economic growth will improve this ratio. Reliance on short-term borrowing continues to aggravate the problem, exposing the economy to currency depreciation and rising inflation. Short-term fixes, such as lower borrowing costs, reduced interest rates, and occasional debt buybacks, fall far short of delivering long-term stability. The country must aim to reduce its dependence on foreign loans by simultaneously increasing exports and expanding domestic revenue streams. Export growth, in turn, is tied to the health of the banking sector — the lifeline of any functioning economy. Pakistan’s Advance to Deposit Ratio (ADR) remains misaligned with deposit growth. This is a red flag. If the ADR does not grow in step with the deposit base, the ability of banks to fund economic activity remains constrained. A financial injection into the value-adding sectors — manufacturing and agriculture — is overdue. These sectors have the potential to generate employment, increase productivity, and significantly boost tax revenues. Moreover, there is cause for some optimism: early economic indicators this fiscal year are encouraging. The budget deficit is projected to be 0.5% below target, and if the policy rate is cut by 50 to 100 basis points in the next cycle, nearly Rs 1 trillion could reduce the debt servicing cost. Inflation has eased, allowing the State Bank of Pakistan to bring down its policy rate by a remarkable 1,000 basis points from its historic high of 22%. Meanwhile, remittances continue to be a key pillar of economic stability. These inflows — expected to hit a record $38 billion — have helped maintain the balance of payments and supported the exchange rate. That said, policymakers must not lose sight of the broader picture. The economy is approaching a saturation point. Budget planning must now align closely with structural reforms and policy objectives. Enhancing transparency, strengthening audits, and cracking down on corruption are crucial steps that must accompany any fiscal blueprint. A few key priorities deserve immediate attention. Raise the tax-to-GDP ratio by 3% to 5% annually through better documentation and enforcement. Encourage private sector lending by instructing commercial banks to disburse at least Rs. 6 trillion in credit next year — particularly to the manufacturing and agricultural sectors. Track and report all financial transactions to bring down Currency in Circulation (CiC), which stands at Rs. 10.36 trillion. Rebalance liquidity injections via Open Market Operations (OMOs). Scheduled banks have parked Rs. 33.3 trillion in government securities. This crowding-out must reverse to free up credit for the private sector. Investment is necessary in essential crops like cotton, wheat, and sugar to cut import bills and save foreign exchange. Pakistan must invest in tech startups, research, and innovation. Reliable internet, infrastructure, and education reforms — along with long-term tax incentives — will create a robust digital economy. With a debt-to-GDP ratio above 70%, deficit financing is a threat to long-term stability. Austerity has already eroded spending on welfare and education. The upcoming budget must be a document of strategic intent, not just a ledger of incomes and expenses. It should reflect a vision to unlock sustainable growth, reduce foreign dependence, and empower domestic enterprise. This is not a matter of ambition, but necessity.