Introduction Introduction The economy of Pakistan has been mired till recently in a state of“stagflation.” The GDP growth rate was still relatively low at below 4 percent in 2020-21, while the rate of inflation is up, especially of food prices. The successive attacks of COVID-19 since February 2020 have affected lives and livelihoods in a big way. The levels of unemployment and incidence of poverty have never been so high, at 15 percent and 38 percent of the population, respectively. The silver lining is the success in stabilizing the economy by bringing down the current account deficit from the peak level three years ago. The fundamental reason for this success is a decline in the import bill due to quantum depreciation of the rupee and more recently because of the jump in home remittances. However, exports have shown little buoyancy and imports have jumped up once again recently. Pakistan is back in the IMF Program which requires implementation in the short run of perhaps the toughest set of reforms ever. The budgetary position remains weak with the fiscal deficit rising to between 7 percent and 9 percent of the GDP. The earlier buoyancy shown by tax revenues has gone away and the tax-to-GDP ratio has fallen. Debt servicing has grown rapidly, and development spending has had to be severely curtailed. Government debt now stands at almost 78 percent of the GDP, way above the limit of 60 percent of the GDP imposed by the Fiscal Responsibility and Debt Limitation Act, 2005. There is a dire need for a Charter of the Economy, with a broad-based political consensus and civil society support. It will identify the wide-ranging reforms and policies for raising economic growth, tackling inequality, creating jobs, reducing poverty, improving food security, and promoting human development. This report on the Charter of the Economy, prepared with the support of the Friedrich Ebert Stiftung(FES) Foundation, attempts to initiate the process of accomplishing this task. Thanks are due to the FES, a German foundation, which supports Social Democracy. This is also the guiding vision of the report in line with the fundamental Principles of Policy in the Constitution of Pakistan. A careful attempt is made to identify the nature of problems or constraints before solutions and reforms are proposed. A schematic representation of the areas covered in the Charter of the Economy for achieving higher, sustainable, and inclusive growth are given in the enclosed chart. The key economic targets to be attained by 2024-25 are highlighted in the first part. iii