17% Poverty rate in Pakistan - World Bank

[Omar1984]

If the figures are correct then its good news, but still more work has to be done to eradicate poverty. With all the food that grows in our country and all the resources we are blessed with, there's still some people in Pakistan suffering from hunger. Pakistan grows more than enough food for its population, other than food Pakistan is also blessed with other natural resources, such as gas, coal, gold, and copper but our government never made good use of them. Once our government makes good use of these resources for the country, then there's no reason why anyone in Pakistan should suffer from poverty.

 

[TopCat]

Pakistan's agro and food is the main reason of rural poverty reduction.
But why the figure is sometimes 37% and sometimes 17%??? Means I am so lost as the figures vary that much. Pakistani population does not look that poor though to say 37%.

 

[Hasnain2009]

^^
Poverty was near 22 when Musharraf was president, but when Zardari came, he started saying that poverty is at 37%, so after completing his tenure he would say that when he(zardari) took government poverty was over 37% and now its 30%
lol.......

 

[ajpirzada]

Pakistan's agro and food is the main reason of rural poverty reduction.
But why the figure is sometimes 37% and sometimes 17%??? Means I am so lost as the figures vary that much. Pakistani population does not look that poor though to say 37%.

22% is wat was last year.
we are still to come up with a figure for this year. but here is the fight.
world bank says its 17% but pakistani authorities say its 37%.

is it clearer than before ???

 

[javeda]

Sir, you explanation seems to be flawed. I am not an economics major but this is what I know:

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of the functional currency buys fewer goods and services; consequently, inflation is a decline in the real value of money—a loss of purchasing power in the internal medium of exchange which is also the monetary unit of account in an economy.

Simply put rise in inflation means lesser purchasing power or in a simpler term: Less Bang for the Buck. Pakistan has Inflation rate touching 30%, meaning if the same person was earning Rs. 10,000 last year to achieve the same he'd need to earn Rs. 13,000 now. So if prices of wheat will need to be increased beyond 30% to lessen the level of poverty or to increase the actual earning of the farmer. Please correct me if I am wrong here.

Purchasing power will increase only when the rise in income is more than Inflation. I am not aware what exactly was the rise in price of wheat, but It'd need to be higher than 45% to have this significant impact on poverty levels. Also, all the farmers will not be growing wheat, and even paying to purchase some. So rise in support price for all farm goods would need to be higher than 30% to move farmers above poverty line.

Again, I am not a thorough economist and stand willing to be corrected.

Don't worry even economists don't know the real cause of inflation. They deny that it is because of ususry and interest charged by banks which borrower has to return by adding additional money into the principal amount. Where does this additional money come from? From inflated prices of the goods he's going to sell I think.

 

[javeda]

WB, PC at daggers drawn over ‘real’ poverty figures ​

Monday, June 01, 2009
By By Mehtab Haider

ISLAMABAD: The World Bank (WB) has validated a decline in poverty by 5.1 per cent in Pakistan, suggesting that compared to the earlier 22.3 per cent of the population living below the poverty line, the number stands revised downwards to 17.2 per cent of the total population, official documents available with The News reveal.

The Planning Commission high-ups, however, are in no mood to accept this positive development and are reluctant to include the latest figures in the upcoming Economic Survey 2008-09, which will be launched before the budget for 2009-10. Their doubts stem from the apparent incredulity of the figure showing a positive trend during the economic recession.

The World Bank has endorsed the poverty figure of 17.2 per cent and verified the correct use of methodology to calculate this figure by the subordinate institution of the Planning Commission’s Centre for Poverty Reduction and Social Policy Development (CPRSPD).

But apparently, this is not enough for the Planning Commission bosses, who appear extremely averse to owning up this latest poverty figure, the because PC’s own panel of economists, led by renowned economist Dr Hafeez A Pasha, had estimated poverty in the range of 37.5 per cent just a few months back.

“It is an awkward situation for the Planning Commission, as from top to bottom, everyone talked about poverty line figure in the range of 35 per cent to 40 per cent and now, how they can endorse another analysis done by its another subordinate institution — CPRSPD — showing almost half of poverty of 17.2 per cent, compared to the Panel of Economist number of 37.5 per cent,” the official sources said.

According to the documents available with The News, the WB validated the decline in poverty from 22.3 per cent in 2005-06 to 17.2 per cent on the basis of the data collected in 2007-8 under the Household Income Expenditure Survey (HIES). The latest survey found that poverty in the urban areas stood at 10.10 per cent and in the rural areas, it stood at 20.60 per cent.

Planning and Development Division Secretary Ashraf M Hayat told The News that nothing had been finalised in this regard. When asked whether the government would release the latest poverty figures in the upcoming Economic Survey 2008-09, he said the government would review the situation, which could take a month.

Planning Commission Chief Economist Dr Rashid Amjad, when contacted, told The News that the government was reviewing the latest poverty estimates and nothing had been decided in this regard so far.

But when the Planning Commission’s Member Social Sector Shaukat Hameed was contacted, he said he was not going to verify any information regarding validation of the WB about the latest poverty estimates. When informed about the presentation given by the WB experts on May 29, a copy of which is available with The News, he said they were going to brief Planning Commission Deputy Chairman Sardar Assef Ahmed Ali on Monday (today) and a decision would be taken on the latest poverty estimates.

But sources claimed that the government had almost decided not to release this latest poverty number, because it did not match the ground realities and was contrary to the existing situation. Those, who favour the release of the latest poverty figures, argue that the government should not change its goal post, as this would ruin all the past efforts to stick to the consistent methodology, endorsed both by the donors as well as Pakistan’s relevant economic ministries. The poverty is estimated by using the CPI-based inflation in Pakistan and poverty’s Guru Nanak, Khakwani, also endorsed this way of calculating poverty during the Musharraf-Shaukat Aziz regime.

What is the poverty standard? Do you mean the people living on less than 01USD/DAY?

 

[forcetrip]

What is the poverty standard? Do you mean the people living on less than 01USD/DAY?

It is what can that $1 buy you in regards to what it cannot in other instances .. Main standard to determine poverty is Food, water, housing, education and a list of other things.. I could be wrong but I can buy a lot of things with $1 here that I cannot in the US.. these include basic necessities.

 

[Skywalker]

Recently a lahore based confectionary giant managed to get dealership for porche in Pakistan, his initial target was to sell 70 porche sports car for the first year but he managed to book 200 in first three month and was told stop taking any more bookings.

Is this a poor country, I dont think so. we need to improve the tax net so that we could improve the basic necessities of the general public.I cannot provide you a credible source but I have been told by someone who is not a misinformer.

 

[forcetrip]

we need to improve the tax net so that we could improve the basic necessities of the general public.

+1 .. This should be our primary focus ..

 

[fatman17]

comment: Politics of poverty —Shahzad Chaudhry

Dependence on donors’ pledges is so pervasive that most television channels now need to run a line asking the nation to pray for the success of the prayer on which the Budget is premised!

In the days leading up to the next fiscal year’s budget, what has been keeping the mandarins of the finance ministry engaged has been another matter — how poor are Pakistanis?

By all accounts, and some verified numerical processes of none other than the World Bank, the poverty rate for 2007-8 had been determined at 17 percent. This would have been a six percent reduction in poverty over the 2006-7 performance of the economy when the poverty figure came down from thirties to around 23 percent.

Implicit in the fidelity of these figures of poverty was the acknowledgement that the Pakistani economy had indeed done extremely well during the Aziz years. One is forced to differentiate between the Musharraf and the Aziz years, simply because the wheels began to turn better and smoother from 2004 onwards till grinding to a halt in 2008-9, after the advent of ‘real’ democracy. Give the devil his due. They — the Musharraf-Aziz duo — at least did better on the economy — 2005-6 produced the best ever GDP growth — in budgetary terms it was a stellar performance.

Immediately after the February 2008 elections, and particularly in the last two months of that financial year, the global pricing regime in commodities went through a tsunami, which actually gathered pace in the second half of 2008, assuming astronomical proportions and robbing central banks of their hard-earned dollars; all this happened under the watch of the democratic government of the PPP. The country’s foreign exchange reserves shrank from the healthiest ever number of around $17 billion just before the 2008 elections to as low as $3 billion just within a year. That is when Pakistan had to return to IMF care.

At the current $11 billion reserve mark, certain stability in macro-economic indicators can be claimed, but the loss of rupee value will perhaps remain irrecoverable. Rupee depreciation coupled with quadrupled commodity prices spurred inflation — at its worst, it stood at 30 percent; it now hovers around 20 percent.

This is the background to the poverty issue. What really lies behind this arithmetic of poverty actually has an eye to the future. In a year’s time, when the 2010-11 budget is to be presented, they will be reviewing the 2009-10 performance and finalising numbers for the year gone by. It is then that today’s handiwork will become crucial. With the global economy still not out of the woods, trade sufficiently depressed, capital restricted, Pakistan’s economy on teeters with an on-going insurgency draining resources, the prognosis doesn’t seem good.

Per capita GDP in real terms, which has slid back already, is likely to go further back; and the IMF terms of engagement will keep the economy on a drip-feed while it tries to wrestle with macro-economic sustainability. Such an environment will only add more numbers to real poverty, adding to the poverty rate in a year’s time.

This is where the differential between the 2008-09 and 2009-10 poverty figures will begin to give expression to the performance perception; and this reality haunts the current political leadership. As an interim, the ministry of finance has asked for a review of poverty figures in the last quarter of the previous fiscal year to look for higher final figures in poverty for the year under review, so that the differential with the likely numbers for 2009-10 does not look too dismal.

Same has been the case with the review of annualised GDP numbers for 2007-8, which are now revised from the earlier reported 5.5 percent to 4.1 percent. That doesn’t make 2 percent look as bad in comparison. This to me is probably the first time ever that a government is trying to make the country’s economic performance look poorer.

Is there a way out? The 2009-10 Budget does not reflect that. Budgets in Pakistan have, for some reason, always been characterised as Houdini’s acts; this one is a lot more — as they say in aviation terms — on a wing and a prayer. Dependence on donors’ pledges is so pervasive that most television channels now need to run a line asking the nation to pray for the success of the prayer on which the Budget is premised!

We need to take a leaf from Shaukat Aziz’s book: the man knew how to make a quick buck (no pun intended). It took the Sri Lankans thirty years to reach a figure of $1 billion in the export of tea — their prime and most valued produce. Compare that to the contemporary financial system and you might just raise the figure in a couple of days.

In modern economic parlance, this is termed the miracle of globalised service economies. If not for that, Singapore would not be the richest country in Asia in per capita GDP terms; Hong Kong would not be the financial hub that it is — when China reacquired Hong Kong from Britain, Hong Kong’s reserves were higher than those of mainland China in dollar terms; and the City of London, a separate entity within the London metropolis, would not be the hub of Europe’s financial system.

Shaukat Aziz, a banker, knew the value of rotating capital; money in rotation generates wealth, and in turn makes all those coming into contact richer. This opens avenues of investment enabling the shares to reach the wider population. Shaukat Aziz understood this well, and that is why Pakistan’s services produced this overpowering wave of economic activity; this was what attracted capital from abroad as well as from within.

By depressing the services sector over the last year-and-a-half, and by a strange quirk of logic assuming it to be an exclusive process by instead focusing on production alone, the economy has been robbed of support to the services sector, which is 52 percent of the economy in GDP terms. Production is key to the sustainability of the economic core, and must therefore be given its due importance, but do not forget to generate wealth — that is what people wait for and are hoping to realise soon.

Whether Keynesian postulates support so, I do not know; but what I do know is that well being is not only having the right amount of wheat and rice in your home, it also, and more so, is reflected in what you drive and what you wear and possess. The 21st century definitions of well being have undergone a sea change, and our economic policies need to reflect that. Sadly, it is not so.

Look at India. For years, a 3 percent growth economy, sticking to Nehru’s puritan socio-economic values. The only thing missing was that they did not call each other ‘comrade’. It was only when the “world went flat”, to borrow Thomas Friedman, and services ended up being routed to India, mostly back-office work — ‘outsourcing’ they called it — and Bangalore became the world’s intellectual back-shop, and money grew, and well-being began to be sensed, that the Mittals returned, the Ambanis became relevant, and the Tatas found rejuvenation.

Sentiment is what drives economies. For a long time, they have been calling it the ‘feel-good factor’. And what will take you there is capital and its rotation — not hoarding money. Produce and production are good sustaining economic values, but it is services that will get you there quicker. We need to re-learn our economics better. That is how the rest of the world made it; with better sense we could too. It has been done before, remember.

The writer is a security and defence analyst. He can be contacted at shahzad.a.chaudhry@gmail.com

 

[AgNoStiC MuSliM]

On poverty estimates
​

Tuesday, July 07, 2009
Dr Ashfaque H Khan

The present government is facing real embarrassment on poverty estimates for 2007-08. The Panel of Economists, formed by the government in April 2008 under the leadership of Dr Hafiz Pasha, found that 35-40 percent people of Pakistan were living below the poverty line in 2007-08 – up from 22.3 percent in 2005-06. The political leadership, unaware of the technical details of the estimation techniques, took the estimates of the Panel seriously and everybody, including the ministers, the prime minister and the president started mentioning the numbers within and outside the country. The political leadership had no reason to distrust the professional skills of the Panel of Economists. Their only fault was that they could not realise that some members of the Panel of Economists were positioning themselves to get ministerial jobs and some retired "experts" were trying to secure their jobs in the government. These people could have moved their way to the present regime only if they would paint a bleak picture of the state of the economy, including the substantial rise in poverty. I am positive that this Panel of Economists has had no courage to write similar three paragraphs as documented in the Memorandum of Economic and Financial Policies attached with the Letter of Intent, signed by the Government of Pakistan on Nov 20, 2008 with the IMF. These three paragraphs, written by the present regime, very aptly summarise the major economic and social achievements of the last one decade, including the "reduction in poverty and an improvement in many social indicators." It appears that the Panel of Economists was trying to become more Christian than the Pope and as such came up with poverty estimates based on flawed methodology.

On the other hand, the Centre for Poverty Reduction and Social Policy Development (CPRSPD), using the PSLM Survey 2007-08, also estimated poverty for the year 2007-08. They found that poverty at national level declined sharply from 22.3 percent in 2005-06 to 17.2 percent in 2007-08. Poverty, both in rural and urban areas also registered sharp declines. The estimates of the CPRSPD were also validated by the experts from the World Bank. The "experts" from the Planning Commission are of the view that a sharp decline in poverty in 2007-08 does not depict the ground reality. Why should it depict the ground reality? Firstly, the period it covers is from July 2007 to June 2008. Secondly, poverty estimates are not like the growth number, money supply or inflation which change yearly. Poverty number reflects the changes in the lives of the people which are affected by the policies pursued for a fairly long period of time. To be fair to the government, how can they say now that the poverty in Pakistan has declined substantially in 2007-08 as opposed to their earlier stance that it had increased to the range of 35-40 percent? In other words, how can they say that at the time of taking charge of the state of affairs only 17.2 percent people were living below the poverty line and that there are indications that poverty is on the rise once again in Pakistan. This is indeed the real embarrassment for the government caused by the Panel of Economists.

Poverty estimates are highly sensitive to changes in different variables. For example, should we use calorie intake or basic need approach or should we use 2550, 2250 or 2350 calorie to draw the poverty line? Should we use CPI, SPI, WPI or prices derived from the Survey itself to adjust the poverty line or should we use consumption or income? The basket of commodities may differ across researchers and even the cleaning protocol of data may give different poverty estimates. Thus, at any given point in time there can be different poverty estimates with same or different data sets. What is required, therefore, is that we continue to use the same methodology irrespective of its strength and weaknesses, lest we should never be able to know as to what is happening on poverty front.

There are views about the methodology used by the Panel of Economists. One, that in the absence of PSLM Survey data for 2007-08 the Panel simply adjusted the poverty line upward to the extent of cumulative inflation (20 percent) for the period 2006-07 and 2007-08. On the other hand, they used household consumption expenditure for the year 2005-06, which was not adjusted upward to match the poverty line. In other words, apple was compared with orange. Naturally, such a flawed methodology was bound to produce erroneous results. Second, that the Panel used an equation to forecast poverty. This equation has many exogenous variables, such as food inflation, remittances, openness of trade, development expenditure as percentage of GDP, etc. Giving the value of each variable for 2007-08 and using the estimated parameters it predicted poverty for 2007-08. Forecasting is a complex exercise and requires transparency in the use of data. The Panel did not release those numbers which went into the model. Thirdly, they used the preliminary version of the model whose parameters changed substantially in subsequent revisions. The Panel never bothered to contact the author of the model. Had they contacted him, he could have saved the Panel from such disgrace.

At the end, let me once again appeal to the Planning Commission to release the poverty numbers for 2007-08. Not releasing the number is not a good idea. The number is already out. Don't embarrass the government any more. Forget the Panel's report and trust your own young economists at the CPRSPD.



The author is dean and professor at NUST Business School, Islamabad. Email: ahkhan@nims.edu.pk

On poverty estimates

-------------------------------------------------------------

Based on the last two articles, it appears that the WB figures for poverty were correct, and Pakistan did indeed achieve this milestone.

 

[Patriot]

This is great.With all the ranting by INdians that PA eats all Pakistan Money we still managed to improve people life and get them out of poverty.

 

[notorious_eagle]

This is by far the best news i have ever read on PAKDEF, bringing down the poverty level should be the most important objective of the government. Although i had my doubts regarding the authencity of this news, but if this news comes from WB than it must be legit. Its pretty hard to believe that poverty level is coming down considering the cost of living have shot up in Pakistan, though wages have also gone up. I think education is one sector that needs a major overhaul, i mean i remember when i was in O Levels our school organized a program where we students helped and taught in government run schools. I cant describe in words how horrible the standard of teaching was, and the teachers themselves had no education.

 

[Omar1984]

Imagine how Pakistan would be if Pakistan had honest and sincere leaders.

Pakistan has everything needed to be a successful and prosperous nation.

Something for our politicians to think about.

 

[AgNoStiC MuSliM]

Imagine how Pakistan would be if Pakistan had honest and sincere leaders.

Pakistan has everything needed to be a successful and prosperous nation.

Something for our politicians to think about.

Imagine how prosperous Pakistan would be with even the current crop of leaders had we not been inflicted with this terrorism scourge and not see the flight of capital and investment post 2007.

The agricultural sector is set to show strong growth this year, and that will hopefully help in alleviating some of the pressures on the economy and poverty numbers, given how a significant part of the Pakistani populace is still tied into agriculture.