The World Bank has forecast that around four million people will fall below the lower middle-income poverty line in Pakistan as economic growth drops to just 0.4%, against a target of 5%. The Asian Development Bank (ADB) has also predicted a slump of 0.6% in GDP growth in Pakistan, down from 6% last year, due to political uncertainty, forex challenges, flood-related losses and tighter economic policies. Without public transfers to offset the impact of higher prices, poverty is predicted to increase to 37.2% by 2023 at the lower middle-income poverty line; that equates to an extra 3.9 million people. The severity of poverty has worsened due to the overlapping effects of flooding and the decline in international remittances. The report argues that macro-fiscal and structural reforms are essential to resolve the country’s economic crisis, unlock new financing, avoid balance of payments crises, and establish foundations for higher growth in the medium term. The estimates are closely linked to the International Monetary Fund (IMF) programme that Pakistan should implement as it faces multiple risks due to its rising public debt levels and depleting international reserves.
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