KPP, small loan scheme clubbed

The federal government on Tuesday decided to merge the Kamyab Pakistan Programme (KPP) – a scheme that had been designed to give affordable loans to the middle-income groups – with other similar pro-people initiatives being run by the Prime Minister’s Office. “KPP’s steering committee has recommended merging the initiative of previous government with similar programmes,” a government official told The Express Tribune.

KPP was being administered by the Ministry of Finance while other initiatives were being managed by the PM Office, through the special assistant to PM on youth affairs. Finance Minister Miftah Ismail chaired a meeting of the steering committee, whose recommendation would now be placed before the federal cabinet for formal endorsement, according to officials. Ismail told The Express Tribune that the KPP had been clubbed with the PM’s Small Loan Scheme.

The previous government had approved interest-free loans of up to Rs500,000 each for farmers to support crop cultivation and for individuals for doing business. However, the government was also disbursing loans of greater amount for starting a business and constructing homes under the KPP, which could eventually be wind up. Being a brainchild of former finance minister Shaukat Tarin, who is currently in news for allegedly sabotaging the IMF programme, the previous government had launched the KPP to financially empower the lowest income groups.

The Pakistan Tehreek-eInsaf (PTI) government had initially planned to give interest-free and subsidised loans to 30 million people across the country and disburse Rs1.6 trillion over three years. But due to objections raised by the finance ministry and the International Monetary Fund (IMF), the size of the loans was cut to Rs228 billion. Against the original plan of disbursing Rs1.6 trillion, so far only Rs12 billion could be disbursed under three different components of the programme. A finance ministry official said that after the merger, the ministry would continue to pay interest cost on the already approved and disbursed loans.

Existing beneficiaries will get all tranches of loans. Under the KPP, the government was giving microloans of up to Rs500,000 each to entrepreneurs, businessmen and farmers at zero mark-up and without collateral. It was charging up to 7% interest on higher amounts of loans. The small loans of Rs500,000 were helping farmers to buy inputs and any impediment in the way of their disbursement can affect sowing of sugarcane and wheat crops.

The PTI government had first begun a pilot project of the programme in October last year and then approved its launch across the country hardly two weeks before its ouster. Initially, the PTI government wanted to disburse Rs1.6 trillion, or Rs45 billion a month, among 30 million beneficiaries over three years. But subsequently the amount was reduced to Rs10 billion a month and a maximum of Rs30 billion per quarter.

Even that could not be achieved as total disbursements since the launch remained at only Rs12 billion, said finance ministry officials. Finance Minister Miftah Ismail had in the past criticised the KPP, saying it had been designed by the bankers to support the bankers. Where the government disbursed Rs12 billion among the most deserving people and eventually decided to close the programme, the central bank doled out hundreds of billions of rupees to the rich class.

Under the Temporary Economic Refinance Facility (TERF), the State Bank of Pakistan (SBP) disbursed Rs426 billion among 678 rich people, said Daniyal Aziz, senior PML-N leader, three months ago. Aziz said that the Rs426 billion TERF loans not only fuelled inflation but also put the rupee under pressure when industrialists opened letters of credit for machinery import.

Meanwhile, the current coalition government has also decided to revamp the existing Prime Minister’s Kamyab Jawan Youth Entrepreneurship Scheme. It is considering changing the name of the scheme to PM’s Youth Business Loan Scheme. The PM’s Kamyab Jawan Youth Agriculture Finance Scheme is also being replaced with a new name – PM’s Agriculture Loan Scheme. Three loan schemes under the new banner and name could be launched, depending on people’s needs and their income levels.

The small size of the loan will be up to Rs500,000 with zero interest, then the second tier is up to Rs1.5 million having 5% interest and under the third tier up to Rs7.5 million can be borrowed at 7% interest, according to the proposed structure of the schemes to be managed by the PM Office. Under the ongoing schemes being run by the PM Office, including former PM Imran Khan, nearly Rs52 billion has been disbursed.