Federal govt to spend $330m more on BISP

The cash-starved federal government has approved a $330 million, or Rs92 billion, loan for the Benazir Income Support Programme (BISP) beneficiaries, which comes on the day the International Monetary Fund (IMF) re-emphasised the need for transferring the subject to cash-rich provinces.

The Central Development Working Party (CDWP) approved the concept paper of the Integrated Social Protection Development Programme (ISPDP) for taking the additional financing of $330 million. Planning Minister Ahsan Iqbal chaired the CDWP meeting.

The loan will be taken as budget support to increase reserves of the central bank and the rupee cover will be used to disburse cash among the BISP beneficiaries.

The loan is being acquired from the Asian Development Bank (ADB), which has already given $600 million for the BISP. The lender will charge around 2% interest on the loan in dollar terms. Out of the $600 million, about $500 million has already been spent. Under the BISP, the federal government is paying unconditional cash benefits to 9.3 million families. However, the never-married women are not eligible for the cash handouts.

The reason for excluding these women is to avoid duplication, as the BISP is meant for women having a family, said the BISP officials. According to the constitution, the responsibility of social protection lies with provinces. But the four federating units have refused to take the ownership and resultantly it was excluded from the recently signed National Fiscal Pact.

Major resistance came from Punjab and Sindh, which are the largest beneficiaries of the programme.

The purpose of making cash transfers to lessen the impact of poverty on families can be met without taking foreign loans. Any loan that is not invested in sectors that can provide financial returns to pay back the loan is contributing to debt sustainability problems.

Pakistan has recently requested China to reschedule a $3.4 billion project debt after Islamabad could not find resources to timely meet its liabilities maturing from October 2024 to September 2027.

In a press note after the end of an emergency visit, IMF Mission Chief Nathan Porter on Saturday said both sides "agreed with the need to continue prudent fiscal and monetary policies, revenue mobilisation from untapped tax bases, while transferring greater social and development responsibilities to provinces".

But hours before Porter's statement, the CDWP cleared the concept paper for the BISP loan. It is being taken by the federal government for a subject which is the responsibility of provinces.

The $330 million borrowing will partly cover the needs from 2025 to 2028. The loan is also for institutional capacity for social protection and climate resilience, according to the planning ministry papers.

It will be utilised to provide access to primary and secondary education for children and adolescents of poor families, and give access to health services and nutrition supplies for women, adolescent girls, and children of poor families. According to the concept paper, the money will be used for supporting the young generation of poor families in choosing education pathways for enhanced human capital. It will support the completion of general secondary school education up to grade 12; provide access to non-formal basic education and accelerated learning programmes for the over-aged out-of-school children to help them complete the primary education level.

The additional financing is aimed at strengthening the BISP's ongoing support for women, children and adolescent girls, and addressing the potential impact of climate change on nutrition for the targeted poor population.

There is a plan to enhance the coverage of free health services for the poor pregnant and lactating women and children below two years from the originally targeted 22 districts in Khyber-Pakhtunkhwa and Balochistan to all districts of the two provinces.

In addition, the free nutrition services for adolescent girls will be expanded from the current six districts in four provinces, Azad Kashmir and Gilgit-Baltistan.

The money will be used to raise climate change awareness and strengthen the capacity of nutrition health facilitation centres.