Islamabad: Pakistan’s economy is currently ensnared in a low growth trap, exacerbated by a new budget that significantly increases government spending through enhanced borrowing and higher taxes. This financial strategy raises serious sustainability concerns, as per a new report by the Lahore School of Economics.

According to Lahore School of Economics, titled “State of Pakistan’s economy, growth, inflation, welfare and budget 2024-25,” the budget for the fiscal year 2024-25 is markedly aspirational, escalating from Rs14.5 trillion last year to Rs18.9 trillion. This increase is supported by ambitious tax revenue targets, which are set to rise from Rs9.4 trillion last fiscal year to Rs12.9 trillion, representing a substantial hike without substantial economic debate or context. This scenario places further strain on an already sluggish economy, characterized by declining investment and surging capital outflows.