Pakistan improved its position on Commitment to Reducing the Inequality Index

 But Pakistan still stands among ten bottom countries related to public spending and services

The Oxfam and Development Finance Institution (DFI) has revealed in its report  that Pakistan’s overall ranking on Commitment to Reducing the Inequality Index (CRII) improved by nine points from 137th position to 128th position in 2020.

According to Oxfam’s announcement, the government’s commitment for public spending pushes Pakistan nine points further up on Oxfam’s Commitment to Reducing the Inequality Index.

However, Pakistan stands among ten bottom countries related to public spending and services as its ranking stood at 148th position out of total 158 countries. Pakistan's tax ranking stood at 71st position and labour ranking at 116th position out of total 158 countries.

The index ranks 158 governments on their policies on public services, taxes and workers’ rights; three areas pivotal to reducing inequality and diminishing the COVID-19. It is being launched ahead of the World Bank and International Monetary Fund (IMF) virtual annual meetings next week.

Today, new analysis from the Oxfam and DFI reveals that very low spending on public healthcare, weak social safety nets and poor labour rights meant that the majority of the world’s countries were ill-equipped to deal with the COVID-19 health crisis.

The CRII shows that only 26 out of 158 countries were spending the recommended 15 percent of their budgets on health prior to the pandemic. Further, in 103 countries, at least one in three workers lacked basic labour rights and protections, like sick pay, when the virus struck.

 Syed Shahnawaz Ali, Country Director of Oxfam in Pakistan said, “Pakistan is among the bottom ten countries in terms of public spending and services, ranking at 148th out of the 158 countries. The country spends far too little on health, just 4.10 percent of the total government budget, leading to inadequate public health services and forcing people to pay out of their pockets to get essential health services. Compared to other countries in South Asia, Pakistan is the third lowest in health spending after India and Afghanistan.”

Meanwhile, Pakistan has worked to improve its social protection spending by increasing the Ehsaas programme’s(previously known as Benazir Income Support Programme) budgetary allocation from Rs 102 billion in 2016 to Rs 180 billion in 2020. During COVID-19, 12 million families were supported with unconditional cash transfers of Rs12,000, alleviating the economic pressure which had exacerbated due to the pandemic.

 Unconditional Cash Transfer Programme has now improved as the Ehsaas Kafalat Programme, through which monthly cash stipends of Rs2,000 will be given to at least 7.0 million most deserving and the poorest women all over the country.

On tax, the report ranks Pakistan 71st out of 158 countries due to its statutory tax rate on paper. However, the country is performing poorly on the collection of both personal and corporate income taxes. This has led to low public and social spending and aggravated its debt crisis.

Pakistan is highly burdened with the country’s public debt, with the total debt taking 86.1 percent and 77.7 percent of its GDP respectively.

In the last fiscal year, Pakistan spent Rs2,698.1 billion on debt servicing, taking away 57.5 percent of its revenue, which could have been spent on public spending, especially to mitigate the spread and after- effects of COVID-19.

All the additional resources generated through debt relief or concessional lending must be diverted towards social spending to offset the impacts of COVID-19 and address long-term deficit in public services to address inequality and poverty. 

                                                                Rukhsana Manzoor Deputy Editor