World Bank has urged Pakistan to take urgent steps to achieve financial stability (Photo: Shutterstock/Times Now Digital)
The World Bank has urged cash strapped Pakistan to take urgent steps to achieve financial stability and has said the poverty in Pakistan has shot up to 39.4 per cent as compared to the last fiscal year. The international lender on Friday unveiled draft policy notes that it prepared with the help of all stakeholders for Pakistan's next government ahead of the new election cycle, reported PTI, quoting The Express Tribune newspaper.
Within one year, poverty in Pakistan has risen from 34.2 per cent to 39.4 per cent, with 12.5 million more people falling below the poverty line of the USD 3.65 per day income level, according to the World Bank.
Pakistan's economic model is no longer reducing poverty, and the living standards have fallen behind peer countries, said Tobias Haque, the World Bank's lead country economist for Pakistan.
The global lender urged Pakistan to take urgent steps to tax agriculture and real estate and cut wasteful expenditures in an effort to achieve economic stability through steep fiscal adjustment of over 7 per cent of the economy, the PTI report mentioned.
Pointing out that the increase in poverty was consistent with ground realities, the World Bank identified low human development, unsustainable fiscal situation, over-regulated private sector, agriculture and energy sectors as the priority areas for reforms for the next government.
It proposed measures immediately increase the tax-to-GDP ratio by 5 per cent and cut expenditures by about 2.7 per cent of GDP aimed to put the unsustainable economy back on a prudent fiscal path.
The World Bank is deeply concerned about the economic situation of today, Haque said.
He added that Pakistan is facing serious economic and human development crises, and is at a point where major policy shifts are required.
This may be Pakistan's moment for significant policy shift, said Najy Benhassine, the country director for Pakistan at the World Bank.
The lender proposed reducing distortive exemptions to generate taxes equal to 2 per cent of the GDP. It wanted an increase in taxes on land and property to collect another 2 per cent of GDP in revenues and generate another 1 per cent of the GDP from the agriculture sector.