Collapse of a Country; Budget Gimmickry, Financial Bankruptcy

The collapse of a country refers to a significant failure of a state's central governing authority due to political instability, economic crises, social unrest, and external interventions. But even a cursory look indicates not so well for the status of the Pakistan as an independent country especially if one concentrates on its financial health and budgetary exploration. This write up is an opinion in the same regards.

بِسۡمِ ٱللهِ ٱلرَّحۡمَـٰنِ ٱلرَّحِيمِ

In the name of ALLAH, the Most Gracious, the Most Merciful

Collapse of a Country; Budget Gimmickry, Financial Bankruptcy

 

The collapse of a country refers to a significant decline or failure of a state's central governing authority and its ability to maintain order and provide basic services. This can manifest as a complete breakdown of the state apparatus, leading to widespread instability, violence, and a loss of control over territory and population. Several factors can contribute to state collapse, including political instability, economic crises, social unrest, and external interventions.

State collapse may be a sudden dissolution of a sovereign state or a slow death to oblivion as an independent sovereign state. It is often used to describe extreme situations in which state institutions dissolve rapidly. However; it may be gradual planned actions towards national submission to slavery of some other nation. Societal collapse (also known as civilizational collapse or systems collapse) is the fall of a complex human society characterized by the loss of cultural identity and of social complexity as an adaptive system.

Such a downfall takes place when a particular group in a national hemisphere losses pride in its own culture and traditions and takes control of national helms of affairs. Such a country see the rise of ethos less morons taking control of most national institutions and nose dive of national spirits instigating mass disappointment and disillusionment of large segment of society in its ability to steer its own destiny. In such country, the downfall of government is not classical loss of control over state functions but it shows in people's loss of belief in delivery of justice, methods of routine working and outcome of any day to day process in positive direction. Thus the country losses its value and the rise of violence takes place slowly and anarchy rules supreme in due course of time.

Financial bankruptcy, in its simplest form, is the legal status of an individual or entity and a country that is unable to meet its financial obligations to creditors. It is a formal process; initiated either by the debtor or a creditor, where a court declares the individual or entity insolvent, meaning they cannot pay their debts. This declaration provides a framework for managing the individual's or entity's debts, often involving liquidation of assets or the establishment of a repayment plan. Can a country go bankrupt? YES; in these modern times; countries can experience financial difficulties that may lead to a situation resembling bankruptcy, even though the process differs from that of individuals or corporations. While they don't technically file for bankruptcy in the same way, they can default on their debts, leading to severe economic consequences.

 Budget is the financial plan, budgeting is the process of creating it, and budgetary control is the ongoing monitoring and adjusting based on actual performance. A country's budget is a comprehensive financial plan that outlines the government's anticipated revenue and proposed spending for a specific period, usually a fiscal year. It's essentially a roadmap for how the government intends to collect and allocate its financial resources to address the country's needs and priorities.

 In a country that reflects decline, the budget becomes a gimmick. Budgetary gimmickry refers to the practice of using accounting tricks and deceptive techniques to make a budget appear healthier than it actually are, often to obscure the true financial picture or mislead the public. These tactics can involve manipulating the timing of revenue or expenses, employing one-off transactions, or using creative accounting methods to hide long-term debt or inflate savings; or using temporary funds for ongoing expenses, or relying on unrealistic savings or revenue projections.

Is Pakistan a Progressing Country?

Pakistan came into being as a state for Muslims of Indian Sub Continent for working towards "New Medina" as a country for rise of Islam. It had all the promises that any nation needs to rise as an honourable, dependable and prideful country; however, it lost its eastern part which was more than half of its full entity in just 25 years. However, the western part, which constituted the acronym for its name survived many challenges and swelled in population from 30 millions in 1947 to 250 millions by now. The country is the 5th most populous country in the world. But even a cursory look indicates not so well for the status of the Pakistan as an independent country especially if one concentrates on its financial health and budgetary exploration.

 One is not a student of economy and finance; therefore may not be discussing core economic terms and jargons; however, some public indicators rooming around do make public opinions and shape public sentiments are abuzz these days and may be taken as discussion points. One such news ticker was that 71% of Bank account holders have balance less than Rupees fifty thousands only (Rs 50000/=). This indicates the core strength of national bread earner capacity, because, all salaried class individuals including lowest most employees are required to receive pay through bank. This signifies that the core numbers of documented economy comprise mostly the salaried class individuals only.

 The joke of the whole budget revenue revealed that salaried individuals are the most revenue collection source for FBR (Federal Board Of Revenue) who paid a staggering Rs555 billion income tax in last fiscal year, which were 100% more than the combined taxes paid by retailers & real estate sector (supposed to be profit making sectors). The same salaried class individuals are also paying following taxes on already taxed income:-

(The lowest income approved by govt is Rs 35000/=)

* Filer, 0.3% tax on withdrawals above Rs 50,000

* Non-filer, 0.6% tax on withdrawals above Rs 50,000

* ATM card fee, Rs 700 increase

* SMS fee, Rs 2,000 annually

* Bank statement Rs 300

* Per transaction fee from ATMs other than your own bank, Rs 35

 

FBR failed to achieve sales tax and federal and excise duty targets. That indicates poor health of economic activities thus less income generation and more joblessness. FBR could collect tax of Rs. 38 billion only from traders. This indicates poor tax collection machinery performance of engraved corrupt practices. The overall poor performance of economic performance can be gauged by a staggering approximately 44.7% of the population living below the poverty line, according to World Bank report.

Then the worrying sign for any person interested in nation building is "Booming Banks" but not the Pakistan’s economy as also noted by Mr Asad Ali Shah @Asad_Ashah on X.com. He "Wonder why? The banking sector’s outsized profitability isn’t driven by innovation or risk-taking—it’s built on a system that rewards lending to the government at the expense of the private sector.

As of June 2025, the Investment-to-Deposit Ratio (IDR) stood at an astonishing 100.8%, meaning nearly all deposits are parked in risk-free government securities. Meanwhile, the Advance-to-Deposit Ratio (ADR) had dropped to just 37%—a stark indicator of how little credit actually reaches businesses, especially SMEs. This dynamic fuels bank profits but crowds out Pakistan’s real engines of growth: small and medium enterprises, startups, and industrial expansion. It’s time for policymakers to ask: Are we financing growth—or just borrowing time?" Mr Asad Ali Shah has rightly pointed out the ills of the economy but there aren't any policy makers to take note. (That's the sign of method in madness towards national collapse).

 The Govt of Pakistan has grown like goliath and eating away precious resources of a poor nation. The huge infrastructure is unable to provide any relief of any kind to the masses. The government has missed tax target of nearly Rs13 trillion by a record margin of around Rs1.2 trillion, as the authorities failed to increase tax revenues to 10.6% of the size of the economy, despite putting unprecedented additional burden on the people. Therefore; they are extracting "bhatta" (forced extraction) as tax from all possible means. Therefore govt collected Rs490bn through taxes in electricity bills in FY24-25. Similarly heavy taxes and fixed amount has been levied on petroleum products, gas and other utility measures, even the octroy and toll taxes have been enhanced for next year. On the other hand, the government has approved a partial reversal of its earlier decision to completely abolish or reduce regulatory duties on about 285 imported products in next fiscal year, which is more suited to rich class than middle class or low income group. Thus in easier term, it may be said that the ruling class is imposing heavy taxes on poor nation and making life cozy for itself.

 The government spent Rs905 billion on development schemes last year and most of them are the projects which will only add to national debt with out adding any thing to revenue generation. Therefore, the govt is left only by extracting all possible juices from the masses. There is hardly any scheme to generate income generation for commoners of the country; moreover administrative measures like removal and destruction of cart business from city roads are being taken; thus only fostering unemployment. FBR’s tax collection through electricity bills declined in the last fiscal year (2024-25) to Rs490 billion from both WHT and GST, compared to Rs600 billion in the preceding fiscal year (2023-24). There is a decline of Rs110 billion in the shape of both taxes, and two of the reasons of this decrease might be the shifting of consumers towards the installation of solar on rooftops and reduced consumption by the industrial sector owing to slow or negative growth in the last financial year.

💰Two biggest revenue machines for FBR:

👨‍💼 Salaried Class

⚡ Electricity Bills

Together, they contributed >1 TRILLION—yet they’re the worst-hit!

📉 Purchasing power has collapsed

⬇️ Middle class is sliding into poverty

Is this tax justice or just due to easy target to hunt?🤔

Conclusion

 The total budget outlay of Pakistan is about Rs. 19278 Billion and Rs 8207 Billion will be for debt servicing and only Rs 1000 Billion is for development, which if the ambitious target is not achieved as last year then will add more misery to the nation woes. The country may not have bankrupted but is moving fast into a financial collapse, because, the budget presented appears more of a gimmickry than well thought out financial document for national development and growth. If this trend continues for few more years than only a miracle will rescue the country from slow death to oblivion as an independent sovereign state.