New Delhi, Feb 24 (IANS) Even as the International Monetary Fund (IMF) has praised Pakistan for stabilising its economy under the ongoing support programme, fresh data shows that poverty and income inequality have sharply worsened, raising serious concerns about the social cost of recent reforms.
While key macroeconomic indicators such as fiscal balance and the current account have improved, millions of citizens are facing rising hardship — highlighting a growing gap between economic stabilisation and everyday reality, according to a report by Dawn.
After a long period marked by twin deficits, currency instability and falling foreign exchange reserves, even a small primary surplus is being seen as a sign of improved fiscal discipline.
The improvement in the current account balance has eased some external pressure, although analysts point out that it was mainly driven by lower imports, higher remittances and bilateral debt rollovers rather than strong export growth.
Despite these gains, concerns remain. Revenue shortfalls continue to challenge the government’s finances.
While a recent super tax ruling by the Federal Constitutional Court has provided some temporary relief, economists argue that long-term fiscal stability will require widening the tax base instead of depending on one-time measures.
More worrying is the slow progress on structural reforms and other key targets under the IMF programme, as per the report.
These reforms are considered crucial for turning short-term stabilisation into sustainable economic growth.
The IMF’s Governance and Corruption Diagnostic has also highlighted that macroeconomic stability depends heavily on strong institutions and credible governance.
At the same time, new data has revealed the heavy social cost of the stabilisation measures.
According to recent poverty estimates, nearly 70 million Pakistanis are now living below the monthly poverty line of Rs 8,484, an amount that does not cover even basic needs.
Planning Minister Ahsan Iqbal, while releasing official survey findings, said the poverty rate has risen to almost 29 per cent, the highest level in 11 years, compared to just under 22 per cent in 2019.
Income inequality has also worsened sharply. The inequality index has climbed to 32.7, the highest level in nearly three decades, as real incomes and household consumption declined due to high inflation and economic slowdown.
The labour market situation has also deteriorated, with unemployment rising to 7.1 per cent, the report stated.
Analysts warn that the burden of economic adjustment appears to have fallen more heavily on lower- and middle-income groups.
Without a parallel strategy focused on growth, employment and social protection, they say, the current stabilisation may not be sustainable in the long run, according to the report.
–IANS
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