EDITORIAL: Anyone aware of the daily struggle of millions of Pakistanis — shaped by shrinking incomes, rising costs and dwindling opportunities — would hardly be surprised by the latest poverty and income inequality figures published in a planning ministry survey released on February 20.
Contrary to government claims that the country has achieved economic stability and is on the verge of sustainable growth, the survey paints a far grimmer picture: poverty has hit an 11-year high of 29 percent, income inequality a 27-year peak of 32.7 percent, and nearly 70 million people live below the monthly poverty line of Rs8,484.
Most alarmingly, the long-standing trend of poverty reduction has reversed for the first time in 13 years, while real monthly household incomes have fallen 12 percent since 2019, from Rs 35,454 to Rs 31,127 in FY2024-25.
These findings not only underscore the severe socioeconomic costs of the government’s current policy choices, but also extinguish any hopes of a quick turnaround if the present course persists.
Alongside the survey’s disturbing revelations, it is worth noting that the latest Labour Force Survey had placed unemployment at a 21-year high of 7.1 percent, while the investment-to-GDP ratio has largely stagnated at 13.8 percent in FY2025, signalling a weakened investment climate.
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Several multinationals have pulled out in recent years, while numerous domestic enterprises have also scaled down or shut under mounting economic pressures stemming from a sharply contractionary policy mix dictated by stringent IMF conditions, including but not limited to reduced government intervention in commodity pricing, subsidy withdrawals, elevated interest rates and energy costs, and a punitive tax regime. With the economy’s job-creating capacity clearly compromised as a result, the unemployment rate has inevitably surged, fuelling a vicious cycle where joblessness suppresses incomes, and drives the record poverty and inequality documented in the planning ministry survey.
It is increasingly clear, then, that the IMF-mandated policy framework is both anti-growth and anti-poor. While the Fund has shown little flexibility in allowing Pakistan to phase out these policies, owing to the country’s track record of abandoning critical structural changes midway, this should not deter economic managers from actively negotiating space, particularly to soften the most punishing measures affecting power tariffs and the cost of essential commodities.
The government must make a forceful case that the current policies are extracting an unsustainable social cost, eroding even the faint prospect of a dignified life for millions.
Blaming the IMF alone though would be a convenient abdication of responsibility. Those in power share equal blame for showing indifference to the lived realities of the majority. It is not the Fund that has prevented policymakers from pursuing a more progressive tax regime or expanding the tax base.
The continued reliance on indirect taxes that disproportionately burden lower-income groups and the persistent exclusion of favoured segments from the tax net reflect deliberate domestic policy choices, which are compounded by little effort to rein in current expenditures.
Fiscal recklessness, in fact, has become a hallmark of the present dispensation, with the record poverty and inequality contrasting sharply with rulers’ warped priorities: as households are squeezed by soaring utility bills and taxes, public funds are squandered on highly questionable expenditures, whether it is on the acquisition of luxury aircraft by the government or the billions wasted on the failed internet firewall programme, abandoned when it became clear that the country lacked the technical capacity to implement it.
With what credibility, then, can the government seek concessions from the IMF when it has itself shown, so little regard for the hardships faced by its citizens? Any meaningful reprieve in the policy framework must be matched by a decisive shift at home, which replaces indifference with accountability and aligns government priorities with the economic realities of the public.
Copyright Business Recorder, 2026
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