Far more important (and frustrating) than the growth target, the fiscal deficit or the size of the budget in the Economic Survey 2025-26 is the acknowledgement of 70 million Pakistanis forced to live under the poverty line. According to the survey, poverty has climbed from 21.9 per cent in 2018-19 to 28.9 per cent in 2024-25, pushing 27 million more people into financial distress.
That these figures indicate a collapse in household resilience cannot be stressed enough. For years, families absorbed record inflation and currency depreciation by taking on debt, cutting meals, pulling children out of school, postponing medical care and relying on informal borrowing and migration. Rural poverty is said to have risen from 28.2 per cent to 36.2 per cent, while urban poverty jumped from 11 per cent to 17.4 per cent, signalling that both the agrarian hinterland and the urban lower-middle class are under strain.
The question is not whether stabilisation was needed. Pakistan had little choice but to correct its external accounts, control inflation and regain fiscal space. However, as has repeatedly been argued by these pages, those at the helm did all this while paying little attention to the distributional impacts of their decisions. Exchange-rate correction, energy tariff hikes, and fiscal consolidation may have helped narrow the external deficit, but without compensatory productivity gains, targeted relief or improved public services, the burden has fallen disproportionately on low- and lower-middle-income households. Meanwhile, rents and exemptions for better-off segments remain largely protected.
Provincial disparities further illustrate that poverty is not a uniform national metric. Poverty stands at 23.3 per cent in Punjab, 32.6 per cent in Sindh, 35.3 per cent in Khyber Pakhtunkhwa and 47 per cent in Balochistan, reflecting weak infrastructure, climate stress and insecurity. Punjab’s relatively lower poverty rate also underlines what better connectivity, market access, and administrative reach can deliver. There is no reason why similar conditions should remain absent elsewhere.
What would a poverty-sensitive economic framework look like? Between indexing benefits to food and energy prices, rebuilding agriculture and shifting away from a real-estate-centric growth model, there is a great deal that needs to be done. Equally crucial is the need to broaden the tax base by reducing regressive exemptions and bringing undertaxed wealth, property, retail and high-income segments into the net. We have already heard plenty in this regard from the finance minister amid announcements of tax relief for the salaried class. It is now time to put money where the mouth has been.
Pakistan cannot stabilise its balance of payments by destabilising its households, and ergo, the forthcoming budget should be judged not only by whether it satisfies creditors but by whether it prevents more citizens from falling below the poverty line. *