Pakistan’s Poverty Reached 39.4% in FY23: WB

Islamabad: Careful economic management and deep structural reforms will be required to ensure macroeconomic stability and sustainable growth, stated World Bank (WB)Country Director for Pakistan Najy Benhassine.

While launching ‘Pakistan Development Update (PDU): Restoring Fiscal Sustainability’, the WB on Tuesday suggested Pakistan to undertake the much-needed fiscal reforms including a reduction in tax exemptions and broadening of tax baseon agriculture, property and retailers.

With inflation at record highs, rising electricity prices, severe climate shocks, and insufficient public resources to finance human development investments and climate adaptation, he said

WB reported that the poverty headcount is estimated to have reached 39.4 per cent in Fiscal Year 23, with 12.5 million more Pakistanis falling below the Lower-Middle Income Country poverty threshold (US$3.65/day 2017 PPP per capita) relative to 34.2 per cent in FY22.

In such scenario, it is imperative that critical reforms are undertaken to build the fiscal space and public means to invest into inclusive, sustainable and climate-resilient development, Benhassine added.

According to the WB report, Pakistan’s economy slowed sharply in FY23 with real Gross Domestic Product (GDP) estimated to have contracted by 0.6 per cent.

WB cautioned that Pakistan’s economy would remain vulnerable to domestic and external shocks without a sharp fiscal adjustment and decisive implementation of broad-based reforms.

Economic growth is therefore expected to remain below potential over the medium term with some improvements in investment and exports, it added.

These macroeconomic challenges can be addressed through comprehensive fiscal reforms of tax policy, rationalization of public expenditure, better management of public debt, and stronger inter-government coordination on fiscal issues, said World Bank Economist Aroub Farooq. APP/Agencies