Pakistan’s economic woes have taken a dire turn as the World Bank issued a stark warning, declaring that the country’s economic model has failed to alleviate poverty and is in need of urgent reform. In the midst of a growing economic crisis, the World Bank urged Pakistan to take immediate measures to address rising poverty rates and achieve financial stability.
Rising Poverty Levels
The World Bank unveiled draft policy notes that revealed a distressing picture of Pakistan’s economic situation. According to the global lender, poverty in Pakistan surged from 34.2 percent to a staggering 39.4 percent in just one year, pushing an additional 12.5 million people below the poverty line. This means that approximately 95 million Pakistanis now live in poverty.
Tobias Haque, the World Bank’s lead country economist for Pakistan, expressed concern, stating that “Pakistan’s economic model is no longer reducing poverty, and the living standards have fallen behind peer countries.” This sobering assessment underscores the urgent need for action to reverse the economic downturn.
Calls for Urgent Reforms
The World Bank’s recommendations for Pakistan include taking immediate steps to tax its agriculture and real estate sectors, which have largely remained untaxed. Additionally, the global lender stressed the importance of reducing wasteful expenditures to achieve financial security.
Identifying low human development, an unsustainable fiscal situation, over-regulated private sector, and challenges in the agriculture and energy sectors, the World Bank emphasized the necessity for reform in these areas for the incoming government. One of the key proposals is to increase the tax-to-GDP ratio by 5 percent and cut expenditures by approximately 2.7 percent of GDP.
Tobias Haque emphasized the gravity of the situation, saying, “The World Bank is deeply concerned about the economic situation of today,” as Pakistan grapples with serious economic and human development crises.
A Critical Policy Crossroads
Najy Benhassine, the country director for Pakistan at the World Bank, highlighted the pivotal moment that Pakistan finds itself in, suggesting that “This may be Pakistan’s moment for significant policy shift.” The urgency of this shift is underscored by the fact that inflation in Pakistan soared to a staggering 27.4 percent in August, following the disbursement of USD 1.2 billion from the International Monetary Fund in July, part of a USD 3 billion bailout program spanning nine months.
As Pakistan stands at this critical policy crossroads, the World Bank’s clarion call serves as a stark reminder of the challenges ahead. Addressing the economic crisis and implementing the recommended reforms are paramount to improving the livelihoods of millions and ensuring Pakistan’s financial stability in the future.
Sources By Agencies
