Safia Ramzan
Pakistan’s long journey of reducing poverty, once celebrated as a remarkable achievement, has now stumbled into reversal. A new World Bank report, Reclaiming Momentum Towards Prosperity, warns that the decades of progress in lifting millions out of poverty have been halted by compounding crises—COVID-19, devastating floods, runaway inflation, and deepening economic distress. The warning is stark: unless bold reforms are undertaken, Pakistan risks consigning millions more to cycles of poverty.
Between 2001 and 2018, poverty in Pakistan declined dramatically, from 64.3% to 21.9%. For years, this reduction averaged three percentage points annually. Yet, since 2015, the pace slowed, and since 2020, poverty has once again risen. According to World Bank projections, poverty reached 25.3% by 2023/24. What was once hailed as a triumph of economic resilience is now shadowed by fears of fragility.
The report stresses that Pakistan’s growth model—driven largely by consumption and low-quality service jobs—has reached its limits. While earlier gains were fuelled by non-agricultural labour income, slow structural transformation, low productivity, and a lack of diversification have left households vulnerable. Over 85% of jobs remain informal, and women and youth remain excluded from the workforce. The weakness is systemic: households climb out of poverty temporarily but slip back with every shock.
Human capital gaps remain glaring. Nearly 40% of Pakistani children are stunted, one in four primary-aged children are out of school, and among those enrolled, three in four cannot read a simple story by the end of primary education. Access to services is uneven—by 2018, only half of households had safe drinking water, while 31% lacked sanitation. These deficits not only perpetuate poverty but also undercut the potential of future generations.
World Bank experts argue that targeted reforms are essential. “Protecting hard-won poverty gains requires accelerating reforms that expand jobs and opportunities—especially for women and young people,” said Bolormaa Amgaabazar, the Bank’s Country Director for Pakistan. The recommendations emphasise four pathways: investing in people and local governance, building resilience against shocks, adopting progressive fiscal measures, and strengthening data systems to guide policy.
Despite initiatives like the Benazir Income Support Programme (BISP), Bait-ul-Mal, and the Poverty Alleviation Fund, Pakistan remains overly reliant on safety nets that treat symptoms rather than causes. These programmes offer vital relief but cannot substitute for structural reforms. As Christina Wieser, a lead author of the report, notes: “Expanding access to quality services, creating better jobs, and protecting households from shocks are essential to break cycles of poverty.”
The structural agenda is demanding. Fiscal reforms must prioritise municipal finance, end inefficient subsidies, and redirect spending toward vulnerable groups. Social safety nets must evolve to become shock-responsive, with a more inclusive National Socio-Economic Registry. Investments in education, health, water, and sanitation must be coupled with governance reforms that empower local institutions to deliver where the state often fails.
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The urgency of reform is clear. With climate disasters intensifying, debt burdens constraining fiscal space, and political instability delaying governance improvements, Pakistan faces a narrowing window. The challenge is not simply to restore old gains but to craft a durable, people-centred growth model. Without this shift, Pakistan’s vulnerable households will continue to pay the price for short-term fixes and structural neglect. The report’s message is unambiguous: the time for incrementalism is over—Pakistan must act boldly, or its hard-won poverty reductions will remain fragile, reversible, and incomplete.
