In a distressing development, the poverty headcount in Pakistan is estimated to have reached 39.4% in FY23—more than 5 percentage points higher than in FY22, amid slowing growth and high inflation, revealed World Bank in its report titled ‘Pakistan Development Update: Restoring Fiscal Sustainability’ released on Tuesday.
The significant increase in poverty is due to reduced economic activity and incomes, record-high food and energy prices, disruption to services and loss of crops and livestock during the catastrophic 2022 floods, the World Bank said in the section labelled ‘Poverty’.
The World Bank, in its disclaimer, also mentioned that the last Household Integrated Economic Survey (HIES) that allowed accurate measurement of poverty took place in 2018.
“A new survey is needed to update the poverty headcount,” it said.
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The development comes at a time when Pakistan is facing a massive economic crises with a Stand-By Arrangement (SBA) with the International Monetary Fund (IMF) only giving a few months of breathing space to policymakers. However, while the economy teeters, high inflation has led to a severe rollback of demand and economic activity, leading to frequent shutdowns of industrial units and scaling back of operations.
At the same time, a fast-depreciating rupee – it only gained in value during September – has caused real incomes to fall, with last-year’s floods adding to economic distress. Similarly, higher power tariffs and fuel prices have only aggravated the situation in households.
