WB reclassification of Pakistan purely administrative: Finance Adviser

ISLAMABAD, Oct 8 (APP): Advisor to the Finance Minister Khurram Schehzad on Thursday said the World Bank’s decision to include Pakistan in its Middle East, North Africa, Afghanistan and Pakistan (MENAAP) reporting region is merely an administrative and statistical reclassification and does not affect the country’s geographical identity or income classification.

This distinction was important as regional statistics changed whenever the composition of a statistical group changed, he said in his official X handle.

Once Pakistan’s large population is added to MENAAP, indicators relating to poverty, population and per-capita income will naturally look different from those of the traditional Middle East and North Africa region. Regional averages are usually population-weighted. A large country therefore pulls the regional figure strongly toward its own values. Pakistan’s population is large relative to most MENA economies, so its inclusion will noticeably shift any regional average it joins.

Giving an illustration, he said if a region of 100 million people has a 10% poverty rate (10 million poor). Add a country of 100 million with a 30% rate (30 million poor). The regional rate becomes 20%. Nobody in either country became poorer. The regional rate doubled purely because the group changed.

Therefore, the statements suggesting that a large proportion of “MENA poor” now live in Pakistan creates a misleading impression, he said. Pakistan has been added to the statistical region itself; consequently, its population and poverty figures are now included in the regional totals.

He said the same caution applies when comparing the new MENAAP figures with historical MENA data. An apparent increase in regional poverty may partly reflect the addition of Pakistan and Afghanistan rather than deterioration in the economic conditions of countries traditionally considered part of MENA.

Similarly, Pakistan’s removal from the World Bank’s South Asia reporting group will change South Asian averages.

This does not mean that poverty has suddenly declined in South Asia because conditions improved; part of the statistical change may simply arise because Pakistan is no longer included in that particular regional aggregate.

The correct interpretation is therefore that Pakistan has been reassigned to the World Bank’s MENAAP reporting region.

He said that the comparisons of poverty between Pakistan, India and other countries should consequently rely on country-level data, the same poverty threshold and the same reference year, rather than statistics taken from changing regional groupings.

The central point is simple a change in the statistical basket can change the regional picture without changing the economic reality on the ground, he concluded.