The World Bank has raised concerns about Pakistan’s economic development model, citing a severe crisis and a failure to alleviate poverty. According to World Bank officials, the poverty rate in Pakistan has risen from 34.2 percent in the fiscal year 2022 to a staggering 39.4 percent, pushing approximately 12.5 million people below the poverty line.
In response to these challenges, the World Bank has launched the “Reforms for a Brighter Future: Time to Decide” initiative. This program seeks to engage a wide range of stakeholders in discussions about essential policy shifts needed to guide Pakistan’s economy toward stronger, more climate-resilient, and sustainable growth and development.
Pakistan faces multiple economic challenges, including inflation, rising electricity prices, climate shocks, and limited public resources for development and climate adaptation. The country also grapples with a significant human capital crisis, characterized by high child stunting rates, low learning outcomes, and high child mortality.
The World Bank’s report highlights several concerning trends, such as large fiscal deficits, unsustainable debt levels, high government consumption driving inflation, and persistently low revenues due to a narrow tax base and significant tax expenditures.
To address these issues, the World Bank recommends a comprehensive 10-year economic plan. This plan includes measures such as increasing taxes on agriculture and the real sector, transitioning to a more direct and progressive tax system, reducing tax exemptions for specific sectors, and improving transparency and efficiency in government.
Furthermore, the report emphasizes the need to prioritize investments supporting growth and development, reform or divest state-owned enterprises, introduce new taxes on land and agriculture, and transition to a dynamic open economy driven by private investment and exports.
The World Bank also suggests simplifying business regulations, promoting renewable energy and energy efficiency, closing corporate tax exemptions, adjusting personal income tax brackets, and enhancing service delivery and social protection systems.
In conclusion, the World Bank’s critique of Pakistan’s economic model underscores the urgency of reform to address poverty
