10 million Pakistanis likely to fall below poverty line in 2024: WB

The World Bank has forecasted that 10 million Pakistanis just above the poverty line are at risk of falling below the poverty in the ongoing fiscal year.

The report issued by the WB on Tuesday showed minor expectations of economic growth of 1.8 percent in FY24, as the country recently went through the imminent economic crisis, political uncertainty, and natural disasters in 2022. 

WB’s latest “Pakistan Development Update Fiscal Impact of Federal State-Owned Enterprises,” attributed recent months the economic recovery to stringent monetary and fiscal policy, import control to safeguard foreign reserves and subdued economic activities amidst low confidence levels.

“An articulated, ambitious, and credible economic reform agenda is required to reduce uncertainty and restore confidence,” stated the report.

“Without major reforms, no significant poverty reduction is expected over the medium term,” it added.

According to the report, the robust medium-term recovery will require the implementation of significant medium-term reforms to improve the quality of expenditures and reduce the distortive presence of the state in the economy, including SOE reforms and privatizations, reduced untargeted subsidies, and reduced federal expenditures in areas devolved to provinces."

The report also recommended increasing taxes on agriculture, retail, and property.

“Pakistan is expected to continue facing foreign exchange liquidity issues due to the persistent trade deficit and limited access to external financing. Even with the recent successful completion of the IMF-SBA and continued rollovers, reserves are projected to remain low,” said the multi-donor.

In the absence of a credible and ambitious economic reform agenda, uncertainty is expected to linger, affecting confidence and growth. Economic activity is therefore expected to remain subdued with real GDP projected to grow at 1.8 percent in FY24.

"The fiscal deficit is projected to increase to 8.0 per cent of GDP in FY24 due to higher interest payments. It will then gradually decline over the medium term as interest payments decrease and fiscal consolidation measures take hold."