New Delhi, February 25: Despite praise from the International Monetary Fund (IMF) for its assistance programs, recent data reveals a troubling increase in poverty and income inequality in Pakistan. According to a report by Dawn, the latest figures indicate that millions of citizens are facing escalating hardships, raising serious concerns about the social costs of recent reforms.
The report highlights improvements in key macroeconomic indicators such as fiscal balance and current account, yet it underscores a widening gap between economic stabilization and the real situation of the populace.
After enduring prolonged periods of twin deficits, currency instability, and dwindling foreign reserves, even a modest primary surplus is now seen as a sign of better fiscal discipline. Improvements in the current account balance have alleviated some external pressures. However, analysts point out that this is primarily due to reduced imports, increased remittances, and bilateral debt rollovers, rather than robust export growth. Despite these achievements, challenges remain. A decline in revenue continues to pose a threat to the government’s financial stability.
Recently, a ruling by the Federal Constitutional Court regarding the super tax provided some temporary relief. Nevertheless, economists argue that expanding the tax base is essential for long-term fiscal stability, rather than relying on one-off measures.
The report also notes that progress on structural reforms and other key objectives under the IMF program has been slow. These reforms are deemed crucial for transforming short-term stabilization into sustainable economic growth.
The IMF’s Governance and Corruption Diagnostic Report emphasizes that broad economic stability largely depends on strong institutions and reliable governance. Meanwhile, new data has highlighted the significant social costs of stabilization measures.
Recent poverty estimates indicate that approximately 70 million Pakistanis now live below the monthly poverty line of 8,484 rupees, an amount insufficient to meet basic needs. Planning Minister Ahsan Iqbal announced that the poverty rate has surged to nearly 29 percent, the highest in 11 years, compared to just under 22 percent in 2019.
Income inequality has also worsened, with the inequality index reaching 32.7, the highest in nearly three decades, driven by rising inflation and economic downturns that have led to declines in real income and domestic consumption.
The report states that the labor market has deteriorated, with the unemployment rate climbing to 7.1 percent. Analysts warn that the burden of economic adjustment has disproportionately affected the lower and middle classes. They caution that without a parallel strategy focused on growth, employment, and social security, the current stabilization efforts may not be sustainable in the long run.
– Arpit/DKP
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