Pakistan: 4 million pushed into poverty, World Bank warns of economic crisis

Summary:

• Economic shocks have pushed nearly four million Pakistanis into poverty this fiscal year
• Pakistan must immediately arrange for new foreign loans to avoid a public debt crisis
• Economic growth projections are low, with high inflation rates for both this year and the next fiscal year

Pakistan is facing an economic crisis with almost four million people pushed into poverty due to various economic shocks, according to a new report by the World Bank. The report warns of serious dangers to Pakistan's economic and debt viability and calls on the country to arrange new foreign loans immediately to avoid a public debt crisis.

Flat Economic Growth Projections
The World Bank's flagship report, 'Pakistan Development Update', predicts almost flat economic growth, with an average inflation rate of 29.5% for the current fiscal year. Pakistan's future remains highly uncertain, with economic growth projections of just 0.4% for this year and 2% for the next fiscal year.

Poverty Increase
The report warns that poverty is projected to increase to 37.2% in FY23, pushing an additional 3.9 million people into poverty as compared to last fiscal year. The depth and severity of poverty have also increased, showcasing the overlapping effects of multiple shocks.

Public Transfers and Short-term Effects
The report highlights the need for public transfers to cover losses or mitigate the effect of higher prices. The World Bank states that in the absence of such transfers, households do not have savings to mitigate short-term effects.

Implementing Macro-economic Reforms
Finally, the report emphasizes the need for implementing macroeconomic and structural reforms agreed upon under the International Monetary Fund (IMF) program. The World Bank notes that securing external refinancing is crucial to restoring macro-stability and confidence and avoiding a public debt crisis.

 (With inputs  from ANI)