Economic Instability in Pakistan: The Role of Governance Quality and Macroeconomic Management

Abstract

The economy of Pakistan is at the brink of default. Currently Pakistan is facing intense economic instability that is characterized by high inflation, depreciating currency, declining foreign reserves and increasing dependence on debt. Whereas such type of crisis are not unprecedented in the history of country,  the repetition of these issues points to profound structural challenges. This paper examines the main governance and economic-related factors that are contributing to persistent economic instability in Pakistan. Gathering secondary data from IMF, World bank, and Pakistan’s economic survey , the study examines trends in tax revenue, investment, current account deficits and and governance indicators like government effectiveness, political stability and corruption. The findings of the study underline the interplay between poor macroeconomic management and weak institutional performance as an important drivers of instability. The study provides policy recommendations that are aimed at improving economic resilience, political stability and institutional accountability by giving a framework for informed policy-making and sustainable development.