People save only Rs 6 out of every Rs100 earned; PIDE calls for national savings
ISLAMABAD:
Pakistan’s savings rate has fallen to its lowest level in three decades, with citizens now saving just Rs6 out of every Rs100 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 worsen the country’s investment crisis and continue to push the economy towards external borrowing and repeated programs with the International Monetary Fund (IMF).
In its recommendations for the federal budget for the fiscal year 2026-27, PIDE called for the launch of a national savings campaign and proposed a series of measures aimed at encouraging long-term savings and improving financial security.
The think tank recommended restoring tax incentives for long-term savings schemes, protecting small savers, expanding digital access to national 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, which is significantly lower than comparable regional economies. Bangladesh has a savings rate of 21 percent, India 28 percent and Vietnam almost 30 percent.
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 stated that the low savings rate undermines domestic investment and limits the capital available for economic growth.
It also pointed out that excessive public borrowing crowds out private sector investment, further weakening the country’s ability to generate sustainable growth.
“Pakistanis save only Rs6 out of every Rs100 in income,” noted the report, warning that the trend could make the economy increasingly dependent on foreign loans and external financial assistance.
PIDE called on the government to include measures in the upcoming 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 guarantees for small savers.
The report also recommended improving the availability of national savings products through digital platforms to encourage wider participation in formal savings schemes.
PIDE emphasized the need for structural reforms and stated that the existing model of financing future growth through borrowed resources was no longer sustainable.
