The World Bank has issued a scathing critique of Pakistan's economic development model, which is currently grappling with a severe crisis and has proven ineffective in lifting its population out of poverty. According to World Bank officials, the poverty rate in the country has surged from 34.2 percent in the fiscal year 2022 to an alarming 39.4 percent, affecting approximately 95 million people and pushing an estimated 12.5 million individuals below the poverty line.
During a press briefing that marked the launch of a new program dedicated to 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 in conversations concerning essential policy adjustments required to steer the economy towards more robust, climate-resilient, and sustainable growth and development.
World Bank Country Director Najy Benhassine emphasized the multitude of economic challenges confronting Pakistan, including inflation, escalating electricity costs, severe climate-related disasters, and a shortfall in public resources for developmental and climate adaptation efforts. Pakistan, despite being among the most vulnerable nations to climate change impacts, faces these issues head-on. Furthermore, a "silent" human capital crisis looms large, characterized by alarmingly high rates of child stunting, poor educational outcomes, and elevated child mortality rates.
Pakistan's living standards have consistently fallen behind those of its peers, resulting in a pronounced human development crisis. Adding to the complexity of the situation is the looming specter of climate change, which poses a substantial threat to the country.
The World Bank's report has drawn attention to several alarming trends, including substantial and expanding fiscal deficits, unsustainable levels of debt, inflation driven by excessive government consumption, and persistently low revenues stemming from a narrow tax base and substantial tax exemptions.
In response to these challenges, the World Bank has proposed a comprehensive 10-year economic plan. This multifaceted strategy entails measures such as heightened taxation on agriculture and the real sector, a transition from a regressive to a more direct and progressive tax system, reductions in tax exemptions for specific sectors, and an overhaul of the tax structure to make it more targeted in assisting the impoverished and enhancing the overall economic prospects of the nation.