People save only Rs 6 out of every Rs 100 earned; PIDE calls for a national savings campaign
ISLAMABAD:
Pakistan’s savings rate has fallen to its lowest level in three decades, with citizens now saving just Rs 6 out of every 100 rupees earned, 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 repeat programs with the International Monetary Fund (IMF).
In its recommendations for the federal budget for the 2026-27 fiscal year, PIDE called for the launch of a national savings campaign and proposed a series of measures to encourage long-term savings and improve financial security.
The think tank 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 track 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.
PIDE noted that high inflation and low savings returns have discouraged people from depositing money in banks. Instead, many are increasingly turning to gold, real estate, and cash as their preferred stores of value.
The report says the low savings rate undermines domestic investment and limits the capital available for economic growth.
He also pointed out that excessive government borrowing crowds out private sector investment, further weakening the country’s ability to generate sustainable growth.
“Pakistanis save only 6 rupees out of 100 rupees of income,” the report observes, warning that this trend could make the economy increasingly dependent on foreign loans and external financial aid.
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 his proposals were special savings incentives for women, retirees and workers employed in the informal sector, as well as additional guarantees for small savers.
The report also recommends improving the accessibility of domestic savings products through digital platforms to encourage wider participation in formal savings schemes.
Stressing the need for structural reforms, PIDE said the existing model of financing future growth through borrowed resources was no longer viable.
