The World Bank has issued a grave warning regarding Pakistan’s economic state, urging the nation to take swift action. They propose taxing key sectors like agriculture and real estate while reducing wasteful expenditures to stabilise the economy. This endeavour aims for a significant fiscal adjustment, equivalent to over 7 percent of Pakistan’s economic size.

The World Bank also revealed alarming statistics, with poverty levels surging to 39.4 percent in the last fiscal year, pushing an additional 12.5 million people below the poverty line. Currently, nearly 95 million Pakistanis live in poverty.

To address these challenges, the World Bank has drafted a set of policy recommendations in collaboration with stakeholders, focusing on low human development, unsustainable fiscal practices, overregulation in the private sector, and issues in the agriculture and energy sectors.


Immediate measures include raising the tax-to-GDP ratio by 5 percent and reducing expenditures by about 2.7 percent of GDP, primarily targeting previously protected sectors.

Tobias Haque, the lead country economist at the World Bank, underscores the need for substantial policy changes, given Pakistan’s economic and human development crises.

According to Express Tribune, the World Bank’s recommendations encompass a range of fiscal reforms, including the removal of tax exemptions, increased taxation on real estate and agriculture, and mandatory use of CNIC for transactions.

Furthermore, the institution advises cutting energy and commodity subsidies, implementing a single Treasury account, and adopting temporary austerity measures for short-term savings. Medium-term savings entail streamlining federal spending and enhancing the quality of development expenditures.

Najy Benhassine, the country director for Pakistan at the World Bank, emphasises the importance of political consensus and domestic solutions to address Pakistan’s challenges.

The World Bank highlights the need to address the human capital crisis, reduce energy subsidies, and promote inclusive, sustainable, and climate-resilient development in Pakistan. These measures are imperative to stabilise the nation’s precarious economic situation and alleviate the growing poverty crisis.