Pakistan experienced a significant rise in its poverty rate, reaching 28.9% in the fiscal year 2024-25, a sharp increase from the historic low of 21.9% recorded in 2018-19. This reversal marks one of the most severe setbacks in the nation’s recent social welfare progress. Meanwhile, education spending plummeted to just 0.8% of GDP in FY2025, down from 1.5% in FY2023, reflecting a drastic reduction in investment in the sector.
The Pakistan Economic Survey 2025-26 reveals that inflation played a critical role in deepening poverty, with the poverty line rising from Rs 3,757.85 per adult equivalent per month in 2018-19 to Rs 8,484 in 2024-25. Rural areas, home to the majority of the impoverished population, suffered the most, with rural poverty increasing from 28.2% to 36.2%. Urban poverty also climbed, from 11.0% to 17.4%, though poverty levels remain notably higher in rural regions.
Provincial data shows a worsening poverty situation across all major provinces. Balochistan remains the poorest with 47.0% of its population below the poverty line, up from 41.8%. Khyber Pakhtunkhwa followed with 35.3%, Sindh at 32.6%, and Punjab at 23.3%, all showing significant increases compared to 2018-19 figures.
In a significant development, income inequality also intensified during this period. The national Gini coefficient rose from 28.4 to 32.7, indicating a broader gap in income distribution. Urban inequality increased from 31.0 to 34.4, while rural inequality jumped from 23.4 to 29.2. Sindh recorded the highest provincial inequality at 35.9.
The survey also highlighted potential risks from external geopolitical shocks, particularly the ongoing Middle East conflict, which could exacerbate poverty levels further. It noted that such shocks disproportionately affect the poor, with a UNDP assessment warning that 8.8 million people in the region could be pushed into poverty even by short-term disruptions. Given that approximately 55% of Pakistan’s remittances come from the Middle East, any instability there could severely impact purchasing power and food security for many families.
On the education front, the survey documented a sharp decline in expenditure, with total spending falling to Rs 962 billion in FY2025 from Rs 1,251.06 billion the previous year, a 23% nominal decrease. This reduction was driven largely by provincial budget cuts, with Punjab’s education budget dropping by 64% to Rs 178 billion and Khyber Pakhtunkhwa’s by 62.6% to Rs 94.78 billion. Conversely, Sindh and Balochistan increased their education spending by 40% and 49%, respectively.
Despite official commitments to human capital development, the data reveals persistent structural challenges. The survey pointed out that the quality of education is closely tied to school infrastructure, which remains inadequate. Nationwide, only 59% of primary schools have electricity, with Balochistan lagging at just 21%. Toilet facilities are critically low in Balochistan’s primary schools, at 0.3%. The literacy rate stands at 63%, with female literacy at 54%, while nearly one-third of children remain out of school, although this figure has improved from 38% to 28%.
The survey concludes that Pakistan’s education sector urgently requires sustained reforms to enhance access, quality, learning outcomes, equity, and governance at all levels. It emphasizes that increased public investment in education is essential, yet at 0.8% of GDP, Pakistan’s education spending remains far below that of its regional counterparts.
