Pakistan has been emerging from a period of absolute volatility that saw the country teeter on the edge of default and now the World Bank has reported that over 10 million people are at risk of poverty due to high inflation and low growth. Pakistan has been scrambling with a fragile economic situation for many years now and saw default twice, first in 2022, and second in 2023 when inflation skyrocketed to a historic 38 percent in May of 2023.
At the same period of time, Pakistan failed to get support from the IMF program and it was a failure for the country’s officials who couldn’t manage to deal with the International Monetary Fund IMF. Through this period four finance ministers come and go, and each other blames his predecessor for leaving behind a mess where only the masses are being affected the most.
At the same, Pakistan faced several political disputes that directly affected its economy, and further deteriorated with some sanctions imposed by the IMF. Political uncertainty, following deadly protests and the general elections, had left Pakistan at the brink of economic collapse with now the government lost its way to overcome them.
The World Bank has further painted a grim economic picture of Pakistan in its recent report, saying that over 10 million people are at risk of descending into poverty. The World Bank’s biannual Pakistan Development Outlook report indicated that the cash-strapped Pakistan seemed to miss almost all major macroeconomic targets.
Food insecurity in Pakistan increasing
The report said the country is anticipated to fall short of its primary budget target, remaining in deficit for three consecutive years, contrary to the IMF’s stipulations mandating a surplus.
The report also hinted at food insecurity as Pakistan’s GDP growth is projected to be 1.8 pc and inflation is 26 pc. “Approximately 98 million Pakistanis are already below poverty line while 10 million more are at risk of slipping into poverty due to high inflation and limited wage growth in construction, trade, and transportation,” the report said.
According to the report, Pakistan will continue to face liquidity issues in the medium term due to trade deficit and limited access to external financing, says the report.
“In the absence of major and sustained economic reforms, Pakistan is expected to continue to face foreign exchange liquidity issues due to the trade deficit and limited access to external financing,” the report says.
The increase in prices is driven by domestic gas, electricity, and fuel tariff adjustments resulting in significant increase in domestic energy prices, reveals the report.
95 million Pakistanis struggling to get their basic needs
In September 2023, the World Bank reported that over 12.5 million fell below the poverty line, bringing the total number of 95 million people who are struggling to get their basic needs met. Pakistan also has the lowest per capita income in South Asia and also highest out-of-school kids in the world. Meanwhile, Pakistani currency dropped its value against dollar on a daily basis and on Thursday US currency had gained six rupees against the Pakistani currency in the interbank market.
At the moment poverty, unemployment and folding of industries are considered major economic issues in Pakistan. Almost all resources are shrinking whereas maximum receipts are being spent on debt returnees and rescheduling of loans.
Government bodies, especially political civilians are helpless. Military establishment becoming wealthy and healthy as it made helpless and powerless the civilians and politicians as well. The only way is curtailing the non development budget, especially slashing the defense budget.
