Poverty crisis

Pakistan has just recorded its highest poverty rate in over a decade — and there is no polite way to frame this. It is a damning verdict on the country's political and economic management. According to a recent official report released by the planning ministry, poverty has surged to 29%. Nearly 70 million Pakistanis now live below a monthly threshold of Rs8,484 — an amount that barely covers subsistence. Income inequality is at its highest level in 27 years, while unemployment stands at a 21-year high.

Economic stabilisation under the IMF programme indeed required difficult adjustments. The resulting surge in inflation placed immense pressure on households whose incomes were already stagnant. Natural disasters and sluggish growth compounded the damage. Yet policy cannot be divorced from consequence. When stabilisation is pursued without adequate social protection, it is the poorest who absorb the shock.

The rural economy has borne the heaviest burden. Poverty in rural areas has climbed from 28.2% to 36.2%, while urban poverty has risen sharply from 11% to 17.4%. When disparity reaches its highest level in nearly three decades, it signals that growth — where it exists — is bypassing large segments of society. A country in which prosperity accumulates at the top while vulnerability spreads at the bottom cannot sustain social cohesion for long. Poverty at this scale reflects years of inconsistent reforms and an economic model that has failed to generate broad-based employment.

Economic recovery now has to revolve around employment generation, not merely fiscal compliance. That means there is the need to redirect public expenditure toward sectors that generate large-scale jobs rather than projects that inflate GDP figures without broad labour absorption. At the same time, social protection cannot remain static while prices rise. Cash transfer programmes must be automatically indexed to inflation so that stabilisation does not translate into destitution.