Pakistan’s economic model is ineffective in reducing poverty, warns World Bank.
As Pakistan grapples with an ongoing economic crisis, the World Bank has issued a stark warning: the country’s current economic model is no longer effective in reducing poverty. In a recently published report titled ‘Time to Decide’, the World Bank argues that Pakistan needs urgent economic reforms.
This advice comes amidst alarming indicators like skyrocketing inflation, dwindling foreign exchange reserves and a population where 40% live below the poverty line. And, it has been 75 years since the country got its independence from British rule on August 14, 1947.
Najy Banhassine, the World Bank’s Country Director for Pakistan, pointed out that the nation’s policy decisions are heavily swayed by a coalition of strong vested interests. These include political, military and business elites. According to Banhassine, unless Pakistan changes its course, it risks becoming a perpetual laggard, hamstrung by elite capture and policy decisions that favour a few.
“It is also facing a ‘silent’ human capital crisis: abnormally high child stunting rates, low learning outcomes, and high child mortality,” ANI quoted Banhassine as saying.
With economic hardship mounting, the Pakistani Rupee touched a record low against the dollar, sliding to ₹299.64 in the interbank market. Analysts attribute this to easing import restrictions, which have increased demand for the US dollar. These conditions were stipulated in a $3 billion loan programme from the International Monetary Fund (IMF).
The World Bank has stated that Pakistan’s real per capita growth rate was a mere 1.7% between 2000 and 2020. This is less than half the average growth rate for South Asian countries over the same period.
Equally troubling is the human development crisis the country faces, particularly high rates of child stunting and poor learning outcomes.