WB report urges bold reforms to reduce poverty, build resilience in Pakistan

ISLAMABAD, Sep 23 (APP):: The World Bank (WB), in a report released Tuesday based on 25 years of official household surveys in Pakistan, stressed the need for bold, sustained and people-centered reforms to reduce poverty, strengthen resilience and protect vulnerable populations.
The report titled “Reclaiming Momentum Towards Prosperity: Pakistan’s Poverty, Equity and Resilience Assessment”, marked the first comprehensive evaluation of poverty and welfare trends in the country since the early 2000s.
 After a steady decline from 64.3% in 2001-02 to 21.9% in 2018-19, the national poverty rate began to increase in 2020, mainly due to compounding shocks including COVID-19, inflation, floods and macroeconomic stress, but also because the consumption-driven growth model that delivered early gains has reached its limit, it said.
To address this, the report called for sustained and people-centered reforms to protect poor and vulnerable families, improve livelihood opportunities, and expand access to basic services for all.
 The report taped into 25 years of official household surveys, nowcasted projections, geospatial analysis, and unique administrative data sources.
Official poverty estimates are based on multiple rounds of the Household Integrated Economic Survey (HIES), using Pakistan’s national poverty line and methodology, which remained the most relevant tool for policymaking.
For international comparisons, the report applied global poverty thresholds updated in June 2025.
Beyond 2018-19, which is the latest available survey round, it used micro-simulation models to project poverty estimates.
New poverty estimates and trends based on survey data would be produced once the recently collected HIES 2024-25 data is released.
 “It will be critical to protect Pakistan’s hard-won poverty gains while accelerating reforms that expand jobs and opportunities—especially for women and young people,” WB Country Director for Pakistan Bolormaa Amgaabazar said.
“By focusing on results—investing in people, places, and access to opportunities; building resilience against shocks; prioritizing fiscal management; and developing better data systems for decision-making—Pakistan can put poverty reduction back on track,”she added.
 The assessment found that over the past two decades, poverty reduction in Pakistan was primarily driven by rising non-agricultural labor income, as more households shifted away from farm work to low-quality service jobs.
However, it said, slow and uneven structural transformation has hindered diversification, job creation, and inclusive growth.
“As a result, low productivity across sectors has constrained income growth. Over 85% of jobs remain informal and women and youth remain largely excluded from the labor force,” the report said.
The report also highlighted human capital gaps: nearly 40 percent of children are stunted; one-quarter of primary-school-aged children are out of school; and 75 percent of children who do attend primary school cannot read and understand a simple story by the end of the primary cycle.
“Public service deficits are widespread, with only half of all households having safely managed access to drinking water in 2018, and 31 percent lacking safe sanitation,” it added.
The report underscored systematic, complex, and persistent spatial disparities in welfare across Pakistan. Rural poverty remains more than twice as high as urban poverty, and many districts that lagged behind decades ago continue to do so today. Furthermore, unplanned urbanization has led to ‘sterile agglomeration’ — crowded settlements with low living standards.
“Progress in poverty reduction is threatened by structural vulnerabilities,” said Christina Wieser, Senior Economist and one of the lead authors of the report. 
“Reforms that expand access to quality services, protect households from shocks, and create better jobs—especially for the bottom 40 percent—are essential to break cycles of poverty and deliver durable, inclusive growth,” she added.
The report outlined four pathways to restore progress. First, invest in people, places, and opportunities to tackle human capital gaps, particularly for the most disadvantaged. Investments in public services such as health, education, housing, water, and sanitation, need to be accompanied by strengthening local governance.
Second, build household shock-resilience by making safety nets responsive and inclusive.
Third, adopt progressive fiscal measures by improving municipal finance, phasing out inefficient and wasteful subsidies, and prioritizing targeted investments for the poorest.
Finally, invest in timely data systems to guide decisions, target resources, and track results.