The Karachi Stock Exchange appreciated the government's decision to continue with the on-going incentives for the capital market including extension of exemption of capital gains tax (CGT) on listed shares for another two years, that is, up to June 30, 2010 along with keeping the current tax regime on stock market unchanged.

Opposition political parties termed the budget as disappointing as it lacks any relief measure for the poor and middle class of the country. In their opinion the government is still ignoring the major issues of high inflation, poverty, unemployment and denial of basic needs for the majority of country’s population.

The Government has proposed certain measures to attain goals set for economic growth and stability. Some of the solid measures include reduction in the fiscal deficit, improvement in the system of provision of subsidy, reduction in current account deficit, and bringing up the foreign exchange reserves. Other steps include increase in the income of poor segments of society through provision of cash money under various programmes, to focus more on enhancing agricultural and manufacturing sectors, to restore confidence of investors, to bring real change in the social indicators through allocation of funds and to increase number in the low-cost housing units for the low income groups.

In spite of some timely decisions of the government (such as allocating more funds for education and increasing the salaries of government employees by 20 percent), common people are still sceptical of how the government would control the hyper-inflation rate confronting people. The government announced that the poorest of the poor would get PKR 1,000 monthly aid. However, people have shown concern over the modalities of this scheme, fearing that this new scheme might fall prey to irregularities.

Despite positive reforms and strong performance, major threats to Pakistan economy are high inflation, particularly food inflation, shortage of electricity and political instability. The agricultural sector is still substantially dependent on weather conditions and demonstrates lack of planning with a consequence of import of a number of minor crops. The high cost of doing business, low productivity, infrastructure constraints, inadequate institutional capacity and lack of skills development still remain major constraints. The economy has shown traction in the form of extended period of high growth but its sustainability in competition with exceptionally high growth economies of India and China would depend on a dynamic reform process, solid institutional support, high quality of governance and transparency coupled with political stability.