This presentation contains the general information regarding black economy of Pakistan and its causes with solutions. I have also given the report statistics of IMF about the black economy participation in Pakistan's total output. Hope everyone will find this helpful.

1. BLACK ECONOMY OF PAKISTAN
07/07/2018
MUHAMMAD IBTEHAJ KAHN
EC-048
ECONOMICS & FINANCE
NED UNIVERSITY OF ENGINEERING & TECHNOLOGY

2. WHAT IS BLACK
ECONOMY
A hidden sector of the
economy where cash
transaction goes
unreported.
 Trades, goods and
services that are not
part of official
economy.
 Black money is the
currency of black
economy.

3. BLACK ECONOMIC
ACTIVITIES
 DRUGS SMUGGLING
 HUMAN TRAFFICKING
 TAX EVASION
 CORRUPTION
 GAMBLING
 ANTI- SOCIAL ACTIVITIES
 TERRORISM
 SELLING PIRATED WORK

4. BLACK ECONOMY OF PAKISTAN
 Pakistan is a developing country by all means but instead of this we’ve
several housing societies in major cities and expensive cars choking on
roads. Every second individual has smartphone in hand with internet
availability.
 Many people have better lifestyles than the other individuals of a developed
country. Every economic indicator shows a negative graph of the economy,
but the country seems to be developing at a fast rate.
 This is all because of black economy.
 Black economy covers every illegal activity in Pakistan including corruption
and tax evasion. Pakistan, which does not have very good record on the
World Corruption Index, is not only facing smuggling, corruption and tax
evasion, but also challenges of terrorism and money-laundering.

5.  Every political or military government had its own agenda and set of
priorities that’s why they largely ignored the administrative affairs. As a
result, the country’s institutions failed to act in accordance with standard
operating system.
 The tax-to-GDP ratio in the country is not only the lowest in the region but
also in the world. The pathetic part of the situation is that it is decreasing
every year as the number of the taxpayers is also decreasing.
 Unfortunately, a large portion of the economy is undocumented whether it is
business, trade or industry and even the service sector.
 After the tax evasion, smuggling has the major share in black economy
which is thriving despite various government institutions are busy operating
against it.
BLACK ECONOMY OF PAKISTAN (Cont.)

6.  The government had introduced withholding tax on bank transactions a
couple of years ago to punish the businessmen who were not registered
with the taxation authorities. As a result, the move put the entire banking
industry in trouble as the account-holders stopped using banks for
transactions.
 What is the exact size of the country’s black money is difficult to ascertain
but reports, investigations and research made by local and foreign financial
institutions put it equal to the legal economy
 In the recent report, International Monetary Fund (IMF) has painted a
dismal picture of the country’s economy, reporting that the black economy
is accounted 50% of the total output.
BLACK ECONOMY OF PAKISTAN (Cont.)

7. POSSIBLE SOLUTION TO BLACK ECONOMY
 Restriction on high-value currency notes.
 A second solution is to spread the use of credit cards which make all cash
transactions transparent. (but it is not possible for a country like Pakistan)
 Improvement of Anti-Corruption reforms.
 Expedition of electronic payments as much as possible

9. We can’t remove it completely from the economy, as
its importance can be realized from the following
quote;