Islamabad, Sep 23: Poverty in Pakistan shot up to 39.4 per cent as of last fiscal year, with 12.5 million more people falling into the trap due to poor economic conditions, the World Bank has said, as it urged the cash-strapped country to take urgent steps to achieve financial stability.
The Washington-based lender on Friday unveiled draft policy notes that it prepared with the help of all stakeholders for Pakistan’s next government ahead of the new election cycle, The Express Tribune newspaper reported. Poverty in Pakistan rose within one year from 34.2 per cent to 39.4 per cent, with 12.5 million more people falling below the poverty line of the USD 3.65 per day income level, according to the World Bank. About 95 million Pakistanis now live in poverty, it said.
“Pakistan’s economic model is no longer reducing poverty, and the living standards have fallen behind peer countries,” said Tobias Haque, the World Bank’s lead country economist for Pakistan.
The global lender urged Pakistan to take urgent steps to tax its ‘sacred cows’ – agriculture and real estate – and cut wasteful expenditures in an effort to achieve economic stability through steep fiscal adjustment of over 7 per cent of the economy.
Pointing out that the increase in poverty was consistent with ground realities, the World Bank identified low human development, unsustainable fiscal situation, over-regulated private sector, agriculture and energy sectors as the priority areas for reforms for the next government.
It proposed measures – immediately increase the tax-to-GDP ratio by 5 per cent and cut expenditures by about 2.7 per cent of GDP – aimed to put the unsustainable economy back on a prudent fiscal path.
The lender’s note on strengthening government revenues showed a host of measures to improve the revenue-to-GDP ratio by 5 per cent through the withdrawal of tax exemptions and increasing the burden of taxes on the real estate and the agriculture sectors.
“The World Bank is deeply concerned about the economic situation of today,” Haque said. He added that Pakistan is facing serious economic and human development crises, and is at a point where major policy shifts are required. (PTI)
