EDITORIAL: The revelation by the World Bank (WB) that Pakistan lags regional countries in terms of human capital and poverty reduction, even much of the African region, comes at a very bad time for the government.
Inflation and unemployment are already at record highs, with extremely contractionary IMF bailout programme needed to stay solvent ruling out any chance of the government being able to provide any relief anytime soon. And, as rightly noted by the bank’s global director, Pakistan’s economic growth is too low to reduce poverty.
Therefore, all we can do is brace for the trend of people falling back below the poverty line, which began during the Covid lockdowns, to worsen with time. Interestingly, the WB also pointed out Pakistan’s “regressive taxation system” as a big part of the problem.
Reliance on indirect taxes, which hurt the poor a lot more than the rich, has incrementally increased in direct proportion to the country’s financial problems. And now, with more revenue needed to meet IMF’s stiff conditions, more life is being squeezed out of the middle and lower income classes; hence the twin poverty and human capital dilemmas.
The WB director also spoke very strongly about the large number of stunted children in the country. It turns out that 40 percent children under five years of age are stunted, which presents a serious challenges to the long-term growth of the country. These children will be at a disadvantage throughout their lives.
First, they will be malnourished and compromised in their childhood. Then the lucky ones among them that are able to get an education will lag behind others because their brains will be less developed. Then they will fall further behind when they work in competitive marketplaces.
Therefore, we face a whole generation that will be below par for no fault of their own. The WB calls this a silent human capital crisis.
The bank also suggests some solutions like focusing on child stunting reduction, developing private sector, fixing cash bleeding energy sector, improving water for promoting agriculture sector and increasing investments by creating fiscal space through improving taxes and reducing expenditures.
Yet, right as they are, none of these are new or not known to successive administrations. That just goes to show that we have only our leaders to thank for so many of our completely unnecessary troubles. From a vibrant, liberal and growing country once upon a time we have now fallen behind even countries in Africa just because of the loot, plunder and corruption at the top.
With another election around the corner, we’re hearing the same old promises all over again; the shameless, exploitative hunt for votes. But it may already be too late to rescue the country from itself.
For, there’s no more time or money to transform production, exports, the health infrastructure or save cash hemorrhaging SOEs (state owned enterprises). It is, however, still possible to fix the taxation system. But for that the elite would have to bring itself into the tax net.
None of that has happened so far. But now, with the country truly on the brink, there’s no other choice, even the elite that has eaten off the fat of the land for so long.
Copyright Business Recorder, 2023
Comments
Comments are closed.