EDITORIAL: The World Bank in its report titled Poverty Projections for Pakistan noted a 25.3 percent poverty rate in 2024, up by 7 percentage points from 2023 pushing an additional 13 million people into poverty and that within the “projected increase in poverty, poor households face disproportionately higher welfare losses and get pushed deeper into poverty.”
The report acknowledges that there is lack of data with the absence of a new household survey though it used a micro simulation tool that combined micro data from the latest national household survey (uploaded this past week by the Pakistan Bureau of Statistics as the first-ever digital census dated 2023 – the seventh population and housing census) with high frequency macro indicators to release projections for Pakistan: now-casting and forecasting.
The report highlights the increase in the rate of poverty, adding that the tool models household consumption by using individual and household characteristics and accounts for changes in labour markets, inflation, social transfers and remittances.
This claim will fall by the wayside based on the International Monetary Fund’s (IMF’s) concern, as stipulated in the ongoing Extended Fund Facility staff report dated 10 October 2024 where it states that “The FY16 NA rebasing and recent publication of quarterly GDP have provided a better basis for assessing economic developments, but important shortcomings remain in the source data available for sectors accounting for around a third of GDP, while there are issues with the granularity and reliability of the GFS (Government Finance Statistics).” This prompted the Fund to announce a technical assistance on GFS and Producer Price Index.
This was affirmed by Pakistan authorities in the Memorandum of Economic and Financial Policies, “increasing the granularity and reliability of the Government Finance Statistics is a high priority, and we have requested Fund Technical Assistance to review current data sources and compilation processes and provide guidance on how to improve fiscal reporting in accordance with international standards.”
Be that as it may, there is overwhelming evidence that poverty levels in Pakistan are at a dangerously high level and World Bank report last year estimated lower middle income poverty 40.5 percent (3.65 dollars per day in 2017 purchasing power parity) for fiscal year 2024 with an additional 2.6 million falling below the poverty line from the year before.
And extremely disturbingly the latest World Bank report notes that in 2024 13 million fell below the poverty line – higher by 10.4 million people given that 2.6 million were earlier projected should silence claims by all stakeholders, including the caretakers, of an improving economy reflective of even a sustained quality of life.
One can only hope that the economic team leaders as well as cabinet members focus on the general public’s eroding quality of life and raise the budgeted amount for Benazir Income Support Programme (BISP) by another 200 billion rupees to accommodate the rising number falling below the poverty line by generating resources from slashing current expenditure and not by borrowing locally or internationally as that would simply increase money in circulation without a commensurate raise in output which, in turn, would further fuel inflation and push even more people below the poverty line.
It is essential that the stakeholders understand that the public’s capacity to withstand the policies of their predecessors has eroded – policies that continue to this day and include passing on the buck for poor sectoral performance (in utilities and state-owned entities) onto the taxpayers and burdening the poor more than the rich with 75 to 80 percent reliance on indirect taxes as a revenue source while not altering the elite capture of the resources evident in the budgeted outlay for current expenditure.
Sadly, to this day the focus is on periodic rhetorical threats against the rich tax evaders, backed by notices, and yet to date the revenue shortfall against the target agreed with the IMF for the first half of the year is a whopping 386 billion rupees. It is time to undertake structural reforms to ease rising public discontent that they are the major sources of government revenue though not the major recipients of government expenditure.
Copyright Business Recorder, 2025
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