Why Pakistan's debt cycle quietly blocks you from investing

A returning guest, and a developer who quit

The episode opens with Muzamil welcoming Laeeq Ahmad back to the show without a long re-introduction — listeners who missed the first conversation can find it linked, and the host wants to move straight into substance. Before they do, Laeeq surfaces a small story that frames the entire hour.

After his last appearance, a developer at his office walked up to him and said it was the first time he had genuinely understood why investment matters. Laeeq had been telling the same engineer to start investing for months without traction. The podcast did what the in-person nudge could not. The twist: the same developer resigned shortly after. “He just resigned,” Laeeq says. “Maybe he thought he’d cut more expenses and invest more aggressively.” It is a small moment, but it sets the register for what follows — that the gap between knowing you should invest and being structurally able to is wide, and most of the conversation will sit inside that gap.

Muzamil uses the opening to declare his intent. Previous investing episodes have gone deep into specifics. This one, he wants, should sit at the macro level — the basic concept of why a Pakistani would invest at all, when the country’s habit is to keep cash in a box.

The IPL ad that doesn’t exist on Pakistani TV

Laeeq’s first move is comparative. Last year, watching the IPL on an Indian channel, he noticed something. Between overs, aggressively, the channel was running investment ads. Sachin Tendulkar. M.S. Dhoni. The current playing eleven. Each one telling viewers to put money into mutual funds, into specific instruments, into the market.

He turned the question on himself. When was the last time he had seen a Pakistani celebrity endorse an investment product on television? The only category that came to mind was real estate — a Shahid Afridi-fronted apartment, a Bahria flat, a two-bedroom for a crore. Beyond housing, there is no ad. There is no Babar Azam telling you to open a stock account.

The absence is not an accident, and decoding it is the spine of the next twenty minutes.

The budget, the debt, and why no one will tell you to invest

Laeeq walks through the latest federal budget the way an analyst would, but he keeps the numbers simple enough to follow without a spreadsheet. Of every hundred rupees the government plans to spend, twenty-seven are deficit — money that is not coming in and will be borrowed. Debt repayment alone consumes a third of the budget. Defence is one-third of that debt repayment line. Subsidies and pensions together exceed defence. Provinces take their share. Development — the line item that would actually build something — is reduced to roughly eleven rupees out of a hundred.

“If we didn’t have this debt,” he says, “we would be doing three times the development we’re doing now.”

The next step is the one most discussions skip. Where does that borrowing come from? Sixty percent of the government’s debt is raised from local creditors. Local creditors means local banks. And local banks are full of ordinary people’s deposits. The circle closes: the revenue the government collects is coming out of citizens’ pockets through direct and indirect taxes; the shortfall is being filled by those same citizens’ savings, routed through the banking system.

This is why, in Laeeq’s reading, no one tells the average Pakistani to invest. The banks are already getting a safe, government-backed return on the depositor’s money. There is no commercial reason to push that depositor into a higher-yielding instrument, and there is no political reason for the government to compete with itself for retail capital.

Muzamil makes the lived version of the same point. He has banked with the same institution for eighteen years without a single default. He tried to take a loan against that record and was told to produce thirty-six documents and mortgage property. “If I want to scale, I don’t have anywhere to go to raise money,” he says. The system is not designed for him.

Why the big businesses aren’t listing either

The investment vacuum runs in both directions. Laeeq points out that the Pakistan Stock Exchange has only around five to six hundred listed companies. India has more than six and a half thousand. India’s investment-to-GDP ratio sits above seventy-five percent; Pakistan’s is around fifteen.

The number of active investors in Pakistan is, on his count, somewhere between thirty-five and forty thousand. Official figures cite two to two-and-a-half lakh, but accounts are being abandoned every month. The names you would expect — TPL, Shan Foods — are publicly resisting the idea of listing. Their argument is that the valuation they would receive does not match the value they have already built privately.

Then he names the institutional failure. The Pakistan Stock Exchange itself goes to universities to recruit retail investors. A graduate who has spent lakhs of rupees on a degree is being asked to take guidance from the exchange’s own promotional team — not from a fiduciary, not from an advisor. Meanwhile the next ad they see is real estate. Even the Pakistani cricket team’s shirt carries a real estate sponsor on the back. “Why has no investment company knocked on that door?” he asks. The architecture of attention is captured.

Why the bank doesn’t want to lend to small business

Muzamil pivots the lens to small business borrowing. He notes that when he raises capital himself, he is distributing equity — accepting that he gives up part of the upside. The banking system offers the opposite arrangement: the bank assumes none of the risk, demands collateral, and still charges a hefty monthly payment regardless of the business’s performance.

Laeeq is direct about who that arrangement excludes. “Imagine how many small businesses could have gone from one stage to the next with that forty-five billion.” Instead, the rules are written so that almost any application can be rejected on a technicality. Local startups have started to see VC interest, he allows, but a local bank or local investor backing a small business “because it’s a good business” remains rare.

The five-year saving story he tells lands the point. A relative of his put one lakh into a bank product five years ago. The total return after five years was thirty-nine thousand rupees — less than six percent annualised, in an economy where interest rates touched fourteen percent during the same window. And then, because the relative was a non-filer, ten thousand of that thirty-nine thousand was deducted as tax. The same money, parked in a money market mutual fund, would have earned a tax credit instead of a tax bill.

What the mutual fund tax credit actually does

This is the most actionable section of the conversation. Laeeq walks through the mechanics without softening them.

A saving account at a bank pays low single-digit returns and incurs withholding tax on the interest. A money market or mutual fund investment, structured correctly, generates a tax credit. The credit can be substantial. On a one-lakh annual tax bill, parking a defined amount in a qualifying mutual fund can erase up to twenty thousand of that tax. Combining a mutual fund position with a pension fund contribution stacks another twenty percent of relief.

His framing is sharp: the wealthy do not get wealthy by paying full tax. They get wealthy by understanding loopholes — legal, codified, intended-by-the-statute loopholes — and by routing capital through them. Ordinary Pakistanis treat mutual funds as exotic or untrustworthy, and pay the higher effective tax rate as a result of that hesitation.

The forty thousand versus the ninety-eight million

When Muzamil pushes on the question of scale, Laeeq supplies a single comparison that does most of the work. Pakistan has roughly forty thousand active stock market participants. It has, he estimates, ninety-eight million mobile banking users. The retail investing market is not small because Pakistanis cannot pay — it is small because the on-ramp is broken and the marketing is pointed at the wrong audience.

He walks Muzamil through what it took him personally to open a brokerage account so that he could integrate it into his own platform. Four weeks. Salary slip, six-month bank statement (later softened to three), national identity card copy, and proof of a linked bank account. If you do not already have a bank account, you cannot start. The Roshan Digital Account programme, he notes, brought ten thousand new stock investors online in a single year — a meaningful jump, but still a tiny fraction of the addressable base.

The diagnosis is simple. Brokers are not the right people to onboard a retail saver, because their revenue model is transaction volume. “The brokerage’s interest is not that Muzamil’s one lakh sits there for five years. The brokerage’s interest is that Muzamil does ten transactions a month.”

Following the smart money instead of reading the financials

Later in the discussion, Laeeq describes the thesis behind the platform he is building. It begins with an observation about who actually understands the market in real time. Mutual funds, he argues, are the smart money in the Pakistani context — they have the analysts, they have the discipline, and crucially they publish their top ten holdings every month.

So he asked a simple question: if you blindly invested wherever the best-performing mutual funds were taking new positions, what would happen? He singled out AKD Opportunity Fund and Golden Arrow Stock Fund — both of which returned more than a hundred percent over the prior year — and tracked a position one of them opened in March. He bought at the prevailing price. The next monthly report showed the fund still held the position. He held too. The first month gave him a six percent paper loss; he stayed in, on the logic that the professionals were still in.

That observation is now a product. His platform rates mutual funds across one-day, seven-day, one-month, one-year, five-year and ten-year horizons. It cross-references holdings with the Pakistan Stock Exchange, so a retail user can click on a listed company and see every fund that owns it. It shows expense ratios, fund manager reports, peer comparisons, and fundamental graphs. The pitch is not that the user becomes an analyst — the pitch is that the user can see which analysts are already convinced.

What Muzamil should actually do with ten thousand rupees

Near the end, Muzamil asks the question the audience has been waiting for. He has ten thousand rupees a month to save. His bank does not pitch him on mutual funds. He does not want to read financial statements himself. What does he do?

Laeeq’s answer is layered. An ETF, he explains, is functionally a mutual fund with a lower cost structure — convenient, but it does not carry the same tax rebate. So for someone whose primary lever is tax efficiency, a mutual fund still wins. He recommends specifically considering shariah-compliant ETFs that auto-rebalance their holdings when a company falls out of compliance, so the user does not need to monitor it themselves. The Meezan ETF he mentioned in the prior episode, he notes, had announced a 1.25 rupee dividend on an eleven-rupee price — roughly an eleven percent yield in three months.

Then he closes the loop on why all of this matters now. Local currency in circulation grew from sixteen trillion rupees in 2018 to twenty-three trillion in 2021 — a forty-four percent expansion in three years. That money went somewhere. It went to the people with financial access, who could borrow against it and deploy it into expansion. Everyone without that access experienced the other side of the same equation: a roughly fifteen percent annual depreciation in the value of their cash. “People need to understand,” he says, “how to place their money so that over the long term it can retain its value.”

Crypto, training, and what poverty alleviation actually requires

By the end of the conversation, Laeeq has zoomed back out. A recent report has placed Pakistan in the top ten countries for crypto activity. He treats this as a warning sign, not a celebration. Crypto is a small, volatile market that can move twenty-five percent in an hour. He puts the ceiling at five percent of any portfolio. The overnight-rich narrative, he says, masks the people who blew themselves up on the third trade.

He returns to poverty alleviation with the same realism. The state hands out fourteen hundred rupees, sixteen hundred rupees through the Ehsaas programme. “How can you expect someone to come out of poverty on that?” he asks. The only durable exit, in his framing, is investment literacy delivered through trained operators — not YouTube clips, not influencer threads, but structured training that a person pays for and completes. He is running a cohort now and intends to share the results publicly.

Muzamil closes at the fifty-minute mark, promising listeners that the platform and the training are worth their time, and routing the channel’s usual JazzCash and EasyPaisa donation pointer at the end. The argument the two of them have built, though, is the part that lingers. Pakistan does not have a savings problem. It has a structural problem in which the largest borrower in the room is the state, the banks are too comfortable to compete for retail capital, the brokers are paid to churn rather than guide, and the citizen is left choosing between a depreciating rupee in a box and a financial system that does not seem to be designed for them. Until that changes, knowing you should invest and being able to invest will continue to be two different things.