Poverty emergency

Poverty in Pakistan has been on the rise since the economic turmoil of the past decade began, after decades of steadily declining. The World Bank's latest report confirms the extent of the problem - Pakistan now accounts for 48% of all people in the Middle East, North Africa, Afghanistan and Pakistan region living below the $3-a-day poverty line. To be Pakistani is almost synonymous with poverty.

Sticking to the numbers, between 2018-19 and 2024-25, poverty in Pakistan rose by 6.4 percentage points at the $3 line and 3.2 percentage points at the $4.20 line, driven by the Covid-19 pandemic, the 2022 floods, high inflation and currency depreciation. The official poverty rate - which is almost universally considered to be an underestimation - has climbed from 21.9% in 2018-19 to 28.9%, with rural poverty reaching 36.2% and Balochistan recording 47%. Good-paying jobs are generally the best way to address poverty, but unemployment has hit a 21-year high of 7.1%, leaving 5.9 million people without work. And alongside inflation, the lack of government controls or investment in social services has seen inequality soar, even for people who are gainfully employed.

The government's only significant direct intervention has been expanding the Benazir Income Support Programme and increasing its budget. It now has Rs716 billion budget for 2025-26 and aims to support between 10 and 12 million families, or about 50 million people. But cash transfers alone cannot reverse structural impoverishment. The World Bank projects GDP per capita growth of just 2.2% this fiscal year - far too low to generate the jobs needed for a population exceeding 250 million. As the State Bank governor has warned, the current growth model simply cannot sustain such a population.

Macroeconomic stabilisation was and remains important, but without a dramatic focus shift that leads to significant investment in human capital, rural development and productive employment, the poverty trend will remain irreversible.