75 years after independence, 40% of Pakistanis live below the poverty line; and its economic model is not working
Pakistan is a country that has been struggling with poverty and economic challenges for decades. Despite achieving independence from British colonial rule in 1947, Pakistan has failed to realize its full potential as a prosperous and stable nation. According to the World Bank, poverty in Pakistan rose from 34.2% to 39.4% in just one year, with 12.5 million more people falling below the poverty line of the $3.65 per day income level. About 95 million Pakistanis now live in poverty. Pakistan also has the lowest per capita income in South Asia and highest out-of-school kids in the world.
What are the reasons behind Pakistan's dismal economic performance and persistent poverty? The World Bank has issued a stark warning to the country, saying that its current economic model is no longer capable of reducing poverty and achieving financial stability. The World Bank's country director for Pakistan, Najy Banhassine, said in an interview that "policy decisions are heavily influenced by strong vested interests, including those of military, political and business leaders". He also said that Pakistan is facing a "silent" human capital crisis, with abnormally high child stunting rates, low learning outcomes, and high child mortality.
The World Bank has suggested some urgent reforms for Pakistan to transform its existing policies and improve its economic and social conditions. These reforms include:
- Moving away from underfunded, inefficient, and disjointed service delivery and social protection systems towards coordinated, efficient, and adequately financed service delivery. This would target the most vulnerable segments of the population, especially children and women, and reduce the high rates of malnutrition, illiteracy, and morbidity.
- Shifting from wasteful and rigid public expenditures benefiting a few, towards tightly prioritized spending on public services, infrastructure, and investments in climate adaptation, benefiting populations most in need. This would entail taxing agriculture and real estate, which are largely untaxed sectors, and cutting subsidies and privileges for the elite and the powerful.
- Enhancing the competitiveness and productivity of the private sector, which is hampered by a complex and burdensome regulatory environment, poor governance, and corruption. This would require improving the business climate, strengthening the rule of law, and fostering innovation and entrepreneurship.
The World Bank has emphasized that these reforms are not only desirable but also feasible, as Pakistan has demonstrated its ability to implement bold and successful policies in the past, such as the Benazir Income Support Program, the Ehsaas Program, and the National Disaster Risk Management Fund. However, the World Bank has also cautioned that these reforms require strong political will and commitment, as well as broad-based social consensus and support. The World Bank has stated that it stands ready to assist Pakistan in its reform efforts, but the ultimate responsibility and decision lies with the country itself.
Pakistan is at a critical juncture in its history, as it faces multiple challenges and opportunities in the wake of the Covid-19 pandemic, the withdrawal of US troops from Afghanistan, and the changing regional and global dynamics. Pakistan has the potential to become a prosperous and peaceful country, if it can overcome its internal weaknesses and external threats. The World Bank's report is a timely and valuable contribution to the public debate and policy discourse on Pakistan's future. It is hoped that the report will inspire and inform the policymakers, the civil society, and the citizens of Pakistan to take decisive and collective action to achieve a better and brighter future for themselves and their children.
Source:
(1) Pakistan: Poverty | Asian Development Bank. https://www.adb.org/countries/pakistan/poverty.
(2) Poverty in Pakistan - Wikipedia. https://en.wikipedia.org/wiki/Poverty_in_Pakistan.
(3) Nearly 40% of Pakistan's population now living below poverty line .... https://timesofindia.indiatimes.com/world/pakistan/nearly-40-of-pakistans-population-now-living-below-poverty-line-world-bank/articleshow/103886595.cms.
(4) ‘Pakistan’s economic model is…’: World Bank issues ... - Mint. https://www.livemint.com/news/world/pakistans-economic-model-is-world-bank-issues-warning-as-95-million-fall-below-poverty-line-11695469521937.html.
(5) ‘Pakistan's economic model no longer reduces poverty’: World Bank's .... https://www.hindustantimes.com/world-news/pakistans-economic-model-no-longer-reduces-poverty-world-banks-warning-101695521964817.html.
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