Govt fulfils IMF’s condition, disburses Rs23.6b among BISP beneficiaries

Under bailout programme, lender stressed on supporting low-income groups

ISLAMABAD: Amid thin chances of an increase in the monthly cash stipend of Rs1,500, the government has disbursed Rs23.6 billion among the beneficiaries of the Benazir Income Support Programme (BISP) in the first quarter of this fiscal year.

The amount enabled it to meet an important condition of the $6.2-billion International Monetary Fund (IMF) bailout programme. Under the requirements, the IMF had said that Rs23 billion needed to be distributed from July through September this year, according to officials.

The Finance Ministry is in the process of reconciling the BISP disbursement figures with its database.

BISP reduces poverty by 22% says evaluation report

The progress report will be shared with the IMF during the upcoming talks, scheduled for October 26 to November 6 in Dubai under the ninth review of the economy.

The IMF portrays the BISP spending as a measure to protect the poor from some of the decisions taken under its programme to consolidate budget deficit, particularly increase in electricity and gas tariffs.

The number of beneficiary families also slightly increased to 5.14 million in the first quarter of this fiscal year, according to the officials.

Additional benefits

Besides protecting cash flows to existing beneficiaries, the government is also considering further increasing the monthly cash stipend of Rs1, 500 aimed at helping the lowest strata to offset inflationary impacts on their purchasing powers. However, any further increase is subject to financial assistance from international development partners, as the government faces tight budgetary restrictions.

IMF praises SBP for financial sector’s stability

In fiscal year 2015-16 budget, the government had frozen the monthly stipend at Rs1,500 but promised to add 300,000 more families in the social safety net.

In the Memorandum of Economic and Financial Policies, Finance Minister Ishaq Dar has assured the IMF that the government would protect the real purchasing power of people with additional support from development partners.

The timing and amount of increase remains unclear, as the government looks towards other countries for enhancing the cash limit, according to Ministry of Finance officials.

Govt increases BISP fund by Rs5 billion

Shortcomings

While the government achieved the BISP indicative target, it missed another IMF target on tax collection by the Federal Board of Revenue. As against the IMF target of Rs640 billion, the actual collection from July through September remained at Rs584 billion - Rs56 billion short of the goal.

For the last fiscal year 2014-15, the government had missed the unconditional cash transfers disbursements target of Rs95 billion by a small margin. It had attributed the shortfall to savings in administrative costs.

However, in the last fiscal year that ended on June 30, the government had reached its goal of supporting 5 million beneficiary households.

BISP, PITB to strengthen monitoring mechanism

For the current fiscal year, the government has promised the IMF that it would increase the number of beneficiary households to 5.3 million. Although, the government has allocated Rs102 billion in the budget for disbursements under the BISP, a recent report of the IMF shows that the unconditional cash transfers would be Rs95 billion in the current fiscal year as well.

Published in The Express Tribune, October 20^th, 2015.

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