39% of Pakistanis live in poverty: World Bank Warns of Economic Collapse

On Friday, the WB launched “Reforms for a Brighter Future: Time to Decide” to promote meaningful dialogue on Pakistan's essential development policy problems.

It urged Pakistan to solve its economic problems immediately.

Pakistan should tax agricultural and real estate and decrease public spending, according to the international lender.

For economic stability and a budgetary adjustment of above 7% of GDP, these actions are necessary.

The initiative aims to examine with a wide variety of stakeholders what ‘fundamental policy shifts’ are needed to sustainably steer the economy toward stronger, more climate-resilient, and sustainable growth and development.

It proposes policy changes to move beyond the low equilibrium toward sustainable and inclusive economic development and poverty alleviation.

This consultation program includes draft discussion notes that will be updated with stakeholder feedback.

The Notes, based on foreign experience and a significant body of Pakistani research, advocate major policy changes to end the low-growth, anti-development status quo.  

According to APP, the WB's draft notes recommended moving “From underfunded, inefficient, and fragmented service delivery and social protection systems towards coordinated, efficient and adequately financed service delivery, targeting the most vulnerable, particularly to reduce abnormally high child stunting rates and increase learning outcomes for all children, especially girls.”

Also, it called for "From wasteful and rigid public expenditures benefiting a few to tightly prioritized spending on public services, infrastructure, and climate adaptation, benefiting the most vulnerable."

The international lender recommended switching to a broad-based, efficient, progressive, and equitable tax system to generate enough revenues to significantly increase public investment in human development, infrastructure, and climate adaptation from a narrow, distortive, and inequitable one.

The WB advocated moving “From a protected, stagnant, and unproductive economy with a large state presence towards a dynamic open economy driven by private investment and exports.”

It advised abandoning agriculture sector policies that trapped farmers into low-value, low-productivity farming and embracing a market-driven, productive agricultural system with climate- and water-resilient value chains.

The WB recommended moving “From energy sector policies that drive high energy costs, environmental harms, and unsustainable debt accumulation, towards efficient, sustainable, and resilient generation and distribution, based on accurate price signals, increased competition, and private participation, and a cleaner energy mix.”

WB Country Director to Pakistan Najy Benhassine emphasized the need for a shift from inefficient, ineffective, and vulnerable public sector to accountable, efficient, and transparent government, including at the local level. Pakistan faces economic challenges such as inflation, rising electricity prices, climate shocks, and insufficient public resources.

He noted that “it is also facing a ‘silent’ human capital crisis: abnormally high child stunting rates, low learning outcomes, and high child mortality.”

The discussion notes helped explore long-standing policy issues that were stifling Pakistan's economic and development potential, said Najy Benhassine.

“Priorities and challenges are agreed upon. Open conversations on major policy decisions are needed to find solutions. This program of debates should assist build consensus on inclusive, sustainable, and climate-resilient development, the WB Country Director said.

The World Bank and the Pakistan Institute of Development Economics held nationwide consultations on the draft Discussion Notes' suggestions as part of the ‘Reforms for a Brighter Future’ engagement program.

These featured provincial roundtables with academics, public, and private sector experts and student debates at 21 institutions.

All four provinces' participants' thoughts and opinions have contributed shape what it would take to put Pakistan back on a sustainable, climate-resilient, and inclusive growth path.

The ‘Reforms for a Brighter Future’ campaign will continue online and at in-person events nationwide in the coming months.