EDITORIAL: While government ministers do not tire of touting Pakistan’s hard-earned economic stability, achieved through painful but necessary measures that pulled the country back from the brink, one must ask whether there is any realisation within power corridors that this stability has yet to meaningfully improve human development outcomes.
Not only is the country seemingly trapped in a holding pattern, with no clear pathway for transitioning from stabilisation to sustainable growth, worse still, the dividends of any macroeconomic gains have not filtered down to people, who continue to grapple with rising living costs, deteriorating public services, a debilitating climate crisis and a pervasive sense of economic insecurity.
At the recent Sustainable Development Conference hosted by the Sustainable Development Policy Institute, the UN Development Programme’s Resident Representative Dr Samuel Rizk highlighted this very concern. He described a “tale of two Pakistans”: one enjoying macroeconomic stability, and the other struggling with declining social and human development indicators.
In the latest Human Development Index (HDI) released earlier in the year, for example, Pakistan registered a score of 0.544, placing it 168th out of 193 countries in the ‘low’ human development category. This, it must be noted, was a deterioration from the previous year’s position of 164.
When adjusted for inequality, Pakistan’s HDI fell even further by 33.1 percent to 0.364, highlighting that headline economic gains mean little when they fail to uplift lives, expand opportunities or halt the erosion of human potential. After all, the HDI measures advancements in health, education and living standards, and Pakistan’s failure to move the needle meaningfully on these fronts exposes the fragility of its economic stability, which has had limited impact on the areas of life that matter most.
From widespread child malnutrition and a 40 percent stunting rate among children under five, to 25 million out-of-school children and persistent deficits in essentials such as sanitation, clean water and reliable housing, the realities on the ground tell a far bleaker story than the rhetoric of recovery suggests.
Compounding matters is the ever-escalating climate crisis that threatens whatever development gains Pakistan has made. This year’s floods alone cost the economy US$2.9 billion, while the 2022 mega floods inflicted US$30 billion in losses, devastating agriculture, stalling industry and undermining food security.
Crop failures and rising food prices hit vulnerable populations hardest, worsening poverty and malnutrition as indicated by World Bank figures, and further straining health and education. Yet Pakistan remains critically under-equipped to tackle this lethal mix of environmental and socio-economic pressures, hampered by insufficient resources, lack of vision and long-term planning, and fragmented institutional systems. This has meant that our people remain susceptible to recurring shocks, exposing the lack of resilience in national systems.
Among Pakistan’s key stumbling blocks are chronic financing gaps. As Dr Rizk noted, the country receives around US$14 billion annually from multilateral sources, including the IMF, World Bank, ADB and IFC. However, its needs for achieving Sustainable Development Goals are estimated at 15-17 percent of GDP, or roughly US$50 billion per year. Tax mobilisation remains a critical challenge: the tax-to-GDP ratio languishes at around 10.3 percent, well below the 15 percent IMF benchmark, and is unlikely to exceed 13 percent by 2027.
High-earning sectors remain grossly undertaxed, perpetuating the human development crisis, while other financing sources, including climate investment, remain underexploited. As the finance minister highlighted at the SDPI conference, mobilising climate finance and attracting sustainable private investment are vital for building resilience and ensuring resources reach areas most crucial for the population to flourish. Our economic managers must realise that without a deliberate focus on raising and directing resources towards health, education, climate resilience and basic services, economic stability will continue to remain detached from real human development.
Copyright Business Recorder, 2025