Dwindling savings


LATEST Gallup survey shows the high cost of living has badly affected the saving ability of Pakistani citizens as seven out of 10 persons are complaining of a decline in their savings. Around 73 per cent of Pakistani individuals complained of dwindling savings in the latest survey as compared to 60 percent, who were irked by reduction in savings amid crippling inflation.

Savings play a crucial role in the life of an individual, family and the state as these provide a financial “backstop” for uncertainties and increase feelings of security and peace of mind. Experts also point out that once an adequate emergency fund is established, savings can also provide the “seed money” for higher-yielding investment such as stocks, bonds and mutual funds. Economists also opine that countries whose national savings rate is higher are not dependent on foreign direct investment and that developing nations should prioritize programmes that promote national savings in order for capital to be invested towards the most productive practices. In this backdrop, the situation in Pakistan was already not satisfactory but the events of the last two/three years have rendered the country more vulnerable as far as savings is concerned. This is evident from the fact that the country’s Gross Savings Rate was 17.4% (highest) in 2004, dropped to 5.7% in 2021 and further dropped to 3.8% in 2022. It is also a fact that the record price-hike has not only affected family and national savings but also pushed millions of people below the so-called poverty line. As cost of living has increased tremendously and there is no proportionate increase in incomes, one can understand why people resort to looting truck-loads of wheat flours meant for free distribution among the deserving population. It was also a rare phenomenon that a category of employees of a public sector institution have formally asked the government to allow corrupt practices as they find it difficult to meet their expenses in the meagre pay they get. The findings of the survey should serve as an eye opener for the policy-makers who consider selective and short time measures are enough to provide relief to the masses.