Poverty in Pakistan: a Case Study of Obstacles to Eradicating Global Poverty

Poverty in Pakistan: a Case Study of Obstacles to Eradicating Global Poverty 

Catalina Samaniego, (2024-25 Iowa UNA College Ambassador from Drake University) 

The first UN Sustainable Development Goal (SDG1: No Poverty) aims to eradicate poverty in all forms for all people by 2030; to meet this goal, the global community must work to address economic disparities, improve access to essential resources, and foster inclusive growth. However unattainable this goal may appear, some regions have externalities and barriers that are uniquely complicated. Pakistan serves as a case study of the complex economic and social barriers that need to be specifically addressed to make progress towards SDG 1.   

Poverty remains a significant challenge in Pakistan, with 21% of the population living below the poverty line. This economic disparity is further illustrated by the shared prosperity premium, which measures the difference between the growth of the bottom 40% of income earners and the average growth rate. In Pakistan, this figure stands at a concerning 0.09, indicating that the poorest segments of society are not keeping pace with overall economic progress.  

Pakistan owes the International Monetary Fund (IMF) approximately $6.6 billion, among the highest amounts any country owes to the institution. Pakistan has met its high payments by turning to more "hair of the dog" by taking on another 1 billion form the IMF after completing foundational economic development. Pakistan's foreign debt has continued to increase mainly to finance the current account deficit (CAD) over the past 10 years. The IMF's approach, rolling over existing debt and providing new funding, has led to criticism as the nation grapples with a severe liquidity crunch. This cycle of borrowing without substantial structural reforms has perpetuated economic instability, leaving the government with limited capacity to address the root causes of poverty and creating social stress between classes as citizens are forced to bear increasing taxes and prices. The situation is further exacerbated by a significant brain drain, with over 1 million skilled Pakistanis leaving the country 2023 alone in search of better opportunities abroad, compounding the economic strain by reducing the domestic talent pool and remittance dependency. 

Economic challenges have ignited widespread public discontent in Pakistan. Rising prices of essential goods, stagnant wages, and low levels of economic development have fueled frustration, particularly among the working and middle classes. Many citizens perceive the tax system as inequitable, arguing that the nation's elites do not contribute their fair share. Policies such as banning SIM cards for individuals who fail to pay taxes have exacerbated these tensions, as many believe such measures disproportionately target the general populace while allowing the wealthy to evade accountability. Political corruption and nepotism are widely recognized as barriers to equitable economic development, undermining public trust and contributing to persistent poverty in countries. Pakistan's widespread informal economy, where nearly $457 billion is estimated to be off the books, limits tax collection and restricts effective state-led development.  

Economic and social inequality also extends to gender disparities, further compounding poverty in Pakistan.  Only one in four working age women are employed, with 80% engaged in agriculture, a sector characterized by low wages and limited protections. Educational opportunities for girls remain significantly lower than for boys, with a gender gap of 0.7 percentage points in school enrollment. These disparities limit women's economic potential and exacerbate household poverty, creating a cycle that is difficult to break. Gender-based violence remains a pressing issue, with limited employment and educational opportunities contributing to the vulnerability of women and girls. It is easy to speculate that this systemic problem may worsen under a tighter economic environment with even fewer formal job opportunities, reduced financial stability, and rising prices affecting all people.  

Addressing poverty in Pakistan requires a multifaceted approach. First, tax reforms must ensure that the elite contribute their fair share to reduce the burden on lower-income groups. Second, increasing access to education for girls and creating pathways for women to enter diverse sectors beyond agriculture would enhance economic inclusion. Third, financial restructuring is necessary to reduce reliance on IMF loans by fostering sustainable economic development and increasing liquidity through improved fiscal policies. Lastly, expanding social protection programs is essential to support vulnerable populations, particularly women and children. Pakistan's poverty crisis is deeply rooted in systemic issues that require immediate and sustained attention. Addressing inequality, fostering economic development, and ensuring social justice are critical steps toward a more equitable and prosperous future.  

The challenges Pakistan faces underscore the broader global struggle to achieve SDG 1. The United Nations Development Programme (UNDP) and other international institutions continue to work with nations to implement sustainable solutions, emphasizing that collective efforts are essential in eradicating poverty worldwide. Understanding and addressing the specific economic mechanisms that drive inequality in Pakistan can contribute to broader strategies for achieving the SDGs on a global scale.