Pakistan's poverty rises, education spending drops to record low: survey

• National poverty headcount climbed from 21.9% to 28.9%.
• Education spending dropped 23% to Rs962bn in FY25.
• Urban poverty increased from 11.0% to 17.4%, shows survey.

ISLAMABAD: Pakistan's education spending fell sharply to just 0.8% of GDP in FY2025, down from 1.5% in FY2023, while the national poverty rate surged to 28.9% in FY2024-25, reversing years of progress and pushing millions more people below the poverty line, according to the Pakistan Economic Survey 2025-26 released on Thursday.

The sharp increase in the poverty rate, from a historic low of 21.9% in 2018-19, marks one of the most significant welfare setbacks in the country’s recent history, The News reported.

"The latest estimates, however, indicate a reversal in this declining trend,” the survey stated.

"The national poverty headcount increased to 28.9% in 2024-25, compared to 21.9% in 2018-19."

The poverty line itself told a story of soaring inflation. It increased from Rs 3,757.85 per adult equivalent per month in 2018-19 to Rs8,484 in 2024-25, “reflecting substantial inflation over the period.”

Rural areas, where the majority of Pakistan’s poor live, bore the brunt of the reversal.

Rural poverty jumped from 28.2% to 36.2% over the same period, while urban poverty rose from 11.0% to 17.4%. “Poverty remained significantly higher in rural areas,” the survey said.

At the provincial level, every major province saw poverty worsen. Balochistan remained the poorest, with 47.0% of its population living below the poverty line, up from 41.8 % in 2018-19. Khyber Pakhtunkhwa followed at 35.3% (up from 28.7%), Sindh at 32.6% (up from 24.5%), and Punjab at 23.3% (up from 16.5%).

The survey also documented a sharp rise in income inequality. The national Gini coefficient, a measure of inequality where higher numbers indicate greater disparity, increased from 28.4 in 2018-19 to 32.7 in 2024-25.

"This suggests that the recent rise in poverty was accompanied by wider disparities in income distribution,” the survey said. Urban inequality rose from 31.0 to 34.4, while rural inequality climbed from 23.4 to 29.2. Sindh recorded the highest inequality among provinces at 35.9.

A separate analysis in the survey warned that external geopolitical shocks could push even more people into poverty.

"The shock is strongly regressive. It hurts the poor first and the poor most," the survey said, citing a UNDP assessment that 8.8 million people across the region could be pushed into poverty under even a short disruption scenario.

The survey warned that the Middle East conflict could worsen poverty further. “Another external shock can therefore quickly weaken purchasing power, raise food insecurity and strain remittance-receiving families,” it said.

"Around 55% of Pakistan’s remittances originate from the Middle East."

Separately, the survey showed that education expenditure stood at Rs962.0 billion during FY2025, compared with Rs1,251.06 billion in the previous reported year,” the survey said, reflecting a 23% decline in nominal spending and a near-halving of education’s share in the national economy.

The reduction was driven by cuts at both federal and provincial levels, with provinces accounting for the steepest declines. Punjab’s education budget fell dramatically from Rs492.7 billion in FY2023 to Rs178 billion in FY2025, a 64% reduction, underscoring uneven fiscal prioritisation across regions.

Similarly, Khyber Pakhtunkhwa spending reduced by 62.6% to Rs94.78 billion, while Sindh’s expenditures increased by 40% to Rs369.1 billion and Balochistan spending up by 49% to 136.9 billion.

Despite government rhetoric on human capital development, the data points to persistent structural weaknesses. "The quality of education is strongly linked to the quality of school facilities," the survey noted.

Yet infrastructure gaps remain severe, with only 59% of primary schools having electricity nationwide and just 21% in Balochistan. Toilet availability in Balochistan’s primary schools is a critical 0.3%.

The literacy rate stands at 63%, with female literacy at 54%, while nearly one in three children remains out of school despite a decline from 38% to 28%.

The survey warns that "Pakistan's education sector requires sustained reforms aimed at improving access, quality, learning outcomes, equity and governance across all levels of education. Enhanced public investment in education remains essential."

However, at 0.8% of GDP, Pakistan continues to lag far behind regional peers in education spending.