Pakistan lags behind regional states in poverty reduction: WB

ISLAMABAD: The World Bank’s (WB) Global Director Felipe Lopez-Calva has said that Pakistan was lagging behind compared to other regional states on account of human capital and reducing poverty. 

Addressing the SDPI conference here on Thursday, the visiting WB’s global director said that Pakistan’s economic growth remained lower and insufficient to reduce poverty. He said inequality also existed. The poverty reduction was not matched with the improvements in human capital. He said Pakistan was lagging behind the African region (SAR) in the range of 41 percent.

He was of the view that the poverty rate was lower in urban areas compared to the rural parts of Pakistan but the size of urban areas was bigger, so the number of more poor lived in urban centers. The vulnerability shocks, he said, pushed people into clutches of poverty. The growth and distribution mechanism also played a critical role in reducing poverty and inequality.

He said that Pakistan’s taxation system was regressive and there was a need to move ahead with direct taxation instead of increasingreliance on indirect taxes. Inclusive growth could only provide benefits with well-thought-out fiscal policies and institutional arrangements. He recommended broadening the tax base through increased direct taxes and jacked-up public investment.

The WB’s Country Director, Najy Benhassine, said on the occasion that Pakistan was experiencing brewing up silent human capital crisis, which was not making headlines in the media. There are 40% children under 5 years of age in Pakistan who are stunted which is the most pressing challenge for the long-term growth of the country. “Economic difficulties are not new for Pakistan but rather recurring as the global shocks, Covid-19 crisis and floods further aggravated the situation in Pakistan,” he added.

He suggested prioritizing the five major issues by focusing child stunting reduction, developing private sector, fixing cash bleeding energy sector, improving water for promoting agriculture sector and increase investments by creating fiscal space through improving taxes and reducing expenditures.