Pakistan’s 40% population lives below poverty line: World Bank

[Hitman]

Pakistan’s 40 per cent of the population lives below the  poverty line as per the World Bank, Dawn reported.

Dawn is a Pakistani English-language newspaper.

The country now needs to take a look at its policy decisions driven by strong vested interests of military, political and business leaders, as per the World Bank.

The warning by the financial institution comes ahead of the new election cycle so that the upcoming government can make early choices.

The World Bank has asked Pakistan to tax its agriculture and real estate to achieve economic stability through steep fiscal adjustment of over seven per cent of the size of the economy, as per Pakistan-based The Express Tribune newspaper.

The lender on Friday also revealed that poverty in Pakistan shot up to 39.4 per cent as of last fiscal year with 12.5 million more people falling into the trap due to poor economic conditions. About 95 million Pakistanis now live in poverty.

The Washington-based lender unveiled the draft policy notes that it prepared with the help of all stakeholders for the next government.

The lender identified low human development, unsustainable fiscal situation, over-regulated private sector, agriculture and energy sectors as the priority areas for reforms for the next government.

The World Bank proposed measures that immediately increase the tax-to-GDP ratio by five per cent and cut expenditures by about 2.7 per cent of GDP, aimed at putting the unsustainable economy back on a prudent fiscal path, according to the Express Tribune.

Meanwhile, the WB’s lead country economist Tobias Haque said the bank is deeply concerned about the economic situation of today.

Pakistan is facing serious economic and human development crises and it is at a point where major policy shifts are required, he added.

The bank’s note on strengthening government revenues showed a host of measures to improve the revenue-to-GDP ratio by five per cent through the withdrawal of tax exemptions and increasing the burden of taxes on the real estate and the agriculture sectors, as per The Express Tribune.

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Link:

Pakistan’s 40% population lives below poverty line: World Bank

Pakistan economic crisis: The warning by the financial institution comes ahead of the new election cycle so that the upcoming government can make early choices.

www.hindustantimes.com

 

[SalimBhai]

Just curious. What percentage of Indians live below poverty line and bangladesh?

 

[Hitman]

Just curious. What percentage of Indians live below poverty line and bangladesh?

This was a year back -

Just how poor is India? 10 per cent, says the World Bank

 

[SalimBhai]

This was a year back -

Just how poor is India? 10 per cent, says the World Bank

According to world bank. Pakistan 40 percent. India 16.5 percent and bangladesh 20 percent.

 

[Hitman]

According to world bank. Pakistan 40 percent. India 16.5 percent and bangladesh 20 percent.

India has almost wiped out extreme poverty: International Monetary Fund

 

[ahsan17]

According to world bank. Pakistan 40 percent. India 16.5 percent and bangladesh 20 percent.

That's actually a sharp rise. It was only 3-4 years ago Pakistan had the lowest poverty rate among those countries. But one thing to watch out for is to compare apples to apples. There are different ways of measuring poverty that can yield very different results and when comparing country to country it's important the same metric is used.

 

[SalimBhai]

That's actually a sharp rise. It was only 3-4 years ago Pakistan had the lowest poverty rate among those countries. But one thing to watch out for is to compare apples to apples. There are different ways of measuring poverty that can yield very different results and when comparing country to country it's important the same metric is used.

I am just quoting world bank

 

[Energy]

It's because of the rise of the dollar. Very unfortunate situation and DAWN actually gets the article spot on. The struggle for power dynamics and maximum budget-mafia gang i.e. the establishment is one of the biggest causes. The other being tax avoidance by the big business players.

 

[SalimBhai]

It's because of the rise of the dollar. Very unfortunate situation and DAWN actually gets the article spot on. The struggle for power dynamics and maximum budget-mafia gang i.e. the establishment is one of the biggest causes. The other being tax avoidance by the big business players.

Yes the devaluing of the rupee has really hurt the common man. Shame

 

[MenInG]

Not sure if this is a comprehension issue or not but the title of the thread is about Pakistan

Its not

Compare Pakistan to India etc

 

[Sher Khan]

I won't get into politics on this thread. But even an andha can say that the situation today is far worse than what it was at 2017.

 

[I think therfore I am]

I won't get into politics on this thread. But even an andha can say that the situation today is far worse than what it was at 2017.

The people reflect the rulers and the rulers reflect the people.

It will only get worse for the poor unfortunately

 

[Cricket Warrior]

I don't think these statistics are accurate because despite the high cost of living here in Pakistan no one is taking to the streets for protests, which suggests that the situation is affordable for everyone.

 

[FPresidential]

I don't think these statistics are accurate because despite the high cost of living here in Pakistan no one is taking to the streets for protests, which suggests that the situation is affordable for everyone.

Not true, it’s worse, people of Pakistan are lazy in fighting for their rights, easily defeated and scared by the elites, they have no sense of direction due to corrupt and lack of leadership, literacy rate of 58% is another factor, and the always lazy excuse, “ idhar aisay hota hai aur aisay hota rahe ga”.

 

[SalimBhai]

Also remittance coming on plays a big part. Makes people comfortable

 

[Civil]

I don't think these statistics are accurate because despite the high cost of living here in Pakistan no one is taking to the streets for protests, which suggests that the situation is affordable for everyone.

The article is misleading based on what I found on World bank site.

Here is World Bank's 2023 update you can toggle by Countries World Bank By Country

To begin with the most recent numbers for Pakistan unfortunately are from 2018, so things have probably gotten worse, but regardless these were the same 2018 numbers quoted in the article in OP so they are relevant to the thread.

To put the stats in context The World Bank has three lines for poverty measurement: 'lower' ($2.15/day) , 'middle' ($3.65/day), and "higher" ($6.85/day) income countries.

The 40% number that is in all the headlines, is measured against the middle income level of $3.65. Pakistan is definitely not a middle income country so the number should be high. The chart below from World Bank compares our South Asian region at that same $3.65 middle income level. Granted India and Bangladesh data is more recent but they are both over 40% as well.

​

 

[Civil]

This was a year back -

Just how poor is India? 10 per cent, says the World Bank

In the article posted here India's 2022 poverty at ~10% is measured against the lower income benchmark of world bank ($2.15/day), which if you measure for Pakistan was 5% as of 2018 (probably worse now) . See below for the region when measured against this Lower income rate.

Again to be clear Pakistan's poverty and literacy rate is a much bigger issue than the other countries because we have no action plan out of it. But my point of this post and last post is to let posters know that things have been this bad in the region since 2018 and it is not recent phenomenon like the Dawn Article made it seem.

 

[Civil]

According to world bank. Pakistan 40 percent. India 16.5 percent and bangladesh 20 percent.

Out of curiosity where was the source for this brother?

The World bank numbers I found were from their September 2023 global poverty update and were higher for India and Bangladesh than quoted above

Link:
World Bank Poverty Stats

 

[rpant_gabba]

This could be the reason why:

There isn’t enough money

Pakistan has witnessed a steep decline over the last two years, maybe the steepest in its post-partition (1971) history. If there is one overarching trigger or issue that is at the heart of these symptoms of national decline, it is that ‘there isn’t enough money’.
There seems to be broad consensus about how serious a problem this is. But even now, at every step of the way, the Pakistani elite is consistently seeking to fix the problem by doing the easier (and more unsustainable) thing. Escapism and short-sightedness is ingrained in nearly every single aspect of national life. Khurram Husain has explained the ‘there isn’t enough money’ problem in detail over the last several weeks. I want to try to build on his important work to elaborate on the challenge and demonstrate that the solutions being devised and deployed will be neither durable nor sustainable.

There isn’t enough money. Period. But there are two kinds of money Pakistan and especially the Pakistani government needs: rupees and dollars.

The government needs rupees to pay its bills here at home – the biggest component of these bills are the debt servicing on loans the government takes from banks here at home, in Pakistan, and the salaries and pensions that the government pays to teachers, soldiers, doctors, nurses and the spectrum of public-sector employees (including at many totally dysfunctional organizations).

The government needs dollars to pay its bills both here at home and abroad – the biggest component of these bills are the debt servicing on loans the government takes from other countries, from multilateral organizations, from banks, and from investors that buy Pakistani bonds. But Pakistan also has other kinds of dollar denominated bills – like the fuel it needs to run its power plants, the gasoline and diesel it needs to run cars and buses, the weapons it needs to keep itself safe from bullies near and far, the machinery and electronics that it needs to buy to keep factories and power plants functional, and the raw materials and value added inputs that help those factories manufacture what Pakistanis consume every day.

Since the Pakistani elite has the power to magically make more rupees (by ordering the printing of more rupees), and it has no power at all to magically make more dollars, this elite is understandably more interested in solving the dollar problem than it is in solving the rupee problem. In the elite’s minds, the rupee problem is no problem at all: just keep printing more rupees.

This is a classic example of how the elite’s biases end up ruining the very foundation of the elite’s understanding of the key problem and as a result end up manufacturing half-solutions or solutions to second order problems. We see this problem at every step of the diagnosis.

The focus on the dollar problem is fine, if it were to be accompanied by a focus on the rupee problem, but there is a massive imbalance in the problem identification process and so the solutions themselves are completely imbalanced. It isn’t that the wrong problems are being identified or that the wrong solutions to those problems are being pursued – whether it is putting the foreign exchange smugglers on notice and rationalizing the rupee to dollar rate, or trying to establish bodies like the Special Investment Facilitation Council (SIFC) to create transactions in which Pakistan receives dollars from buyers of its assets. These are fine solutions, for the time being, to real problems. But they are not the most urgent or even the most cancerous problems within the ‘there isn’t enough money’ crisis.

The most urgent and cancerous problem of ‘there isn’t enough money’ is that little magic trick at the disposal of the Pakistani elite: just keep printing more rupees. The power to print more rupees allows the Pakistani elite to avoid the real world. In the real world, when you run out of money, you either find more money, or you stop spending money, or a little bit of both.

Truth be told, elites in most countries try to avoid this math. But in most countries elites also understand that the most important means of solving the ‘there isn’t enough money’ problem is to increase government revenue. And the heart of government revenue for most normal countries is a robust system of taxation in which rich people pay more taxes than poor people. This is how countries survive and sustain their systems.

Very few countries do this in the most just or egalitarian way, but most stable and prosperous countries have done enough and keep doing enough to keep their systems from falling apart. The elites of these countries don’t believe in magic: they just use math to solve math problems. Pakistan’s system is falling apart because its elites know that there is no such thing as magic, but they keep using magic tricks to try to solve math problems.

Pakistan’s own data shows that the government revenue to GDP ratio last fiscal year was 11.4 per cent. The government expenditure to GDP ratio for the same year was 19.1 per cent. This 7.7 per cent of GDP gap is not small. It is Rs6.5 trillion. It seems the government also borrowed domestically to repay some of the external loans (around Rs680 billion, or around $2.26 billion).

These are insane numbers not just because of the huge gaps they represent but also because of their repercussions. If you are printing rupees to pay off previous loans, and in some cases, directly or indirectly printing rupees to pay off loans foreign currency loans – you have no chance of stopping the bleeding of your economic strength. Zero chance. Every year these gaps are filled through printing rupees and borrowing dollars, but if you follow the news, Pakistan actually doesn’t borrow THAT much in dollars. A billion here, a billion there; even the IMF only lends small amounts over short periods of time now ($3.2 billion over nine months most recently). Want to know why?

Because everybody knows ‘there isn’t enough money’ and isn’t making the dollars as readily available as they used to. Remember that thing about the elites of other countries? They use math to solve math problems. They see Pakistan. They see that Pakistan’s elite only collect 11.4 per cent of their GDP in taxes and then print rupees (and call Kristina Georgieva) like there is no tomorrow. Those calls are about that 7.7 per cent gap between Pakistan’s revenues and Pakistan’s expenses. Now we can frame external financing mechanisms any way we want – strategic partners, banks, friends or loan sharks – but the math doesn’t change because of the labels. It stays the same. Pakistan’s sources of financing know that every year it is getting harder and harder for Pakistan to repay the dollars it borrowed earlier.

What does the Pakistani elite do when confronted by this simple math? It goes back to doing the only thing it really knows how to do: the magic trick of printing more rupees.

Even magic has limits. Those limits have now been breached. The continued printing of rupees is a cancer. At stage one and two and three, this cancer ate away at the vitality of the banking and finance sector, destroyed the capacity for government to think and plan, and disemboweled institutions like the FBR. But this is now a stage four cancer. It is now eating away at the basic functioning of the economy–the printing of rupees fuels the persistently high rupee to dollar exchange rate and it is the cause of explosive inflation.

The temporary halt on the rupee’s slide is a welcome development and perhaps even stricter measures to prevent smuggling and hoarding may be merited. But these measures are broadly in the category of magic – not math. They cannot prevent the rupee from eventually falling even further. If you keep printing rupees, nothing can. It’s just math. Magicians and jesters like some of the rent seekers that hold caretaker cabinet positions, can keep yelling abracadabra, but they cannot alter mathematics. Khurram Husain’s warnings about the growing gap between net foreign assets (NFAs) and net domestic assets (NDAs) can be heeded now or they can be heeded later – but there is no escaping math. Even magic has limits.

The writer is an analyst and commentator

 

[Sidilicious]

Yes the devaluing of the rupee has really hurt the common man. Shame

Other than imports getting more expensive, how has it hurt the people below Poverty line?

And I doubt those below poverty line would be dependent directly on the imports.

Though you could argue that with imports being more expensive (and IIRC Pakistan has a trade deficit), the overall economy has been affected which puts more people under poverty line. But there are bigger things affecting the economy than just the devaluation of the PKR. It’s the overall collapse of the economy due to various reasons, with the currency being one of them.