Domestic Resource Mobilisation for Development: An Analysis for the Past Trends and Future Options

The task of poverty alleviation and catching up with the fast-growing Asian countries requires Pakistan to target and achieve at least a 7 percent annual growth over the next 15 years. The key question in this context is whether Pakistan can position itself in a policy and institutional sense to finance the needed investment through increased domestic savings without undue recourse to foreign savings which introduces an element of unsustainability. The analysis of Pakistan’s savings potential and how best it may be drawn on is a central issue at this time, since any optimistic scenario of future growth depends on a considerable increase in the national savings rate from its current low level. The average saving rate over 1990- 91 to 1995-96 has been only 14.7 percent of GDP. It is essential to get this rate up to 20 percent and desirable to get it to 25 percent as soon as possible. How may this be achieved is an issue that we address in this paper.