The World Bank has issued a scathing critique of Pakistan’s economicdevelopment model, which is currently grappling with a severe crisis andhas proven ineffective in lifting its population out of poverty. Accordingto World Bank officials, the poverty rate in the country has surged from34.2 percent in the fiscal year 2022 to an alarming 39.4 percent, affectingapproximately 95 million people and pushing an estimated 12.5 millionindividuals below the poverty line.
During a press briefing that marked the launch of a new program dedicatedto fostering discussions on pivotal development policy matters in Pakistan,the World Bank unveiled “Reforms for a Brighter Future: Time to Decide.”This initiative aims to engage a wide spectrum of stakeholders inconversations concerning essential policy adjustments required to steer theeconomy towards more robust, climate-resilient, and sustainable growth anddevelopment.
World Bank Country Director Najy Benhassine emphasized the multitude ofeconomic challenges confronting Pakistan, including inflation, escalatingelectricity costs, severe climate-related disasters, and a shortfall inpublic resources for developmental and climate adaptation efforts.Pakistan, despite being among the most vulnerable nations to climate changeimpacts, faces these issues head-on. Furthermore, a “silent” human capitalcrisis looms large, characterized by alarmingly high rates of childstunting, poor educational outcomes, and elevated child mortality rates.
Pakistan’s living standards have consistently fallen behind those of itspeers, resulting in a pronounced human development crisis. Adding to thecomplexity of the situation is the looming specter of climate change, whichposes a substantial threat to the country.
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The World Bank’s report has drawn attention to several alarming trends,including substantial and expanding fiscal deficits, unsustainable levelsof debt, inflation driven by excessive government consumption, andpersistently low revenues stemming from a narrow tax base and substantialtax exemptions.
In response to these challenges, the World Bank has proposed acomprehensive 10-year economic plan. This multifaceted strategy entailsmeasures such as heightened taxation on agriculture and the real sector, atransition from a regressive to a more direct and progressive tax system,reductions in tax exemptions for specific sectors, and an overhaul of thetax structure to make it more targeted in assisting the impoverished andenhancing the overall economic prospects of the nation.
