Federal Government to Spend $330 Million More on BISP

Introduction

The Federal Government of Pakistan has approved a substantial $330 million loan to further support the Benazir Income Support Programme (BISP), aimed at alleviating poverty among the nation’s most vulnerable. This decision coincides with the International Monetary Fund’s (IMF) ongoing advocacy for transferring social welfare responsibilities to more financially capable provincial governments.

Background of the Benazir Income Support Programme

What is BISP?

The Benazir Income Support Programme (BISP) is a federal social safety net initiative designed to provide financial assistance to low-income families. It primarily targets women, distributing unconditional cash benefits to help alleviate poverty.

Current Funding and Loan Details

The recently approved loan of $330 million, equivalent to Rs92 billion, will be sourced from the Asian Development Bank (ADB). This loan is part of the Integrated Social Protection Development Programme (ISPDP) and will be used as budget support to bolster the central bank’s reserves. Consequently, the rupee equivalent of this loan will be disbursed among BISP beneficiaries. The ADB, which has already extended $600 million for the BISP, will charge around 2% interest on this additional loan.

Historical Context

The BISP was established to provide financial assistance to Pakistan’s poorest families, helping them meet basic needs and access essential services. To date, the programme has been significantly funded through international loans and grants, with the ADB being a major contributor.

Provincial vs. Federal Responsibility

Constitutional Mandate

According to Pakistan’s constitution, social protection is primarily the responsibility of provincial governments. Despite this, the federal government continues to administer BISP due to provincial resistance.

Provincial Resistance

Punjab and Sindh, the two provinces with the highest number of beneficiaries, have notably resisted assuming ownership of the programme. This resistance has kept BISP under federal administration, despite recent agreements aiming to delegate more responsibilities to provinces.

Implications of the New Loan

Poverty Alleviation

The additional $330 million loan aims to enhance the impact of BISP on poverty alleviation. The funds will support various initiatives, including:

• Primary and Secondary Education: Providing access to education for children and adolescents from poor families.
• Health Services: Offering health services and nutrition supplies to women, adolescent girls, and children from impoverished backgrounds.
• Climate Change Awareness: Raising awareness about climate change and its impact on nutrition.

Institutional Capacity Building

Part of the loan will be allocated to strengthening BISP’s institutional capacity. This includes improving the programme’s ability to support women, children, and adolescent girls, and addressing climate change impacts on nutrition.

Education and Human Capital Development

The loan will support educational pathways for the young generation of poor families, helping them complete primary and secondary education. It will also provide access to non-formal basic education and accelerated learning programmes for over-aged out-of-school children.

Critical Analysis

Debt Sustainability Concerns

While the loan aims to enhance social welfare, it also raises concerns about debt sustainability. Pakistan’s reliance on foreign loans for social welfare, rather than investing in sectors with financial returns, could exacerbate its debt burden.

IMF’s Stance

The IMF has repeatedly emphasized the need for prudent fiscal and monetary policies, including transferring social and development responsibilities to provinces. However, the federal government’s decision to take on additional debt for BISP contrasts with these recommendations.

Future Prospects

Expanding Coverage

The loan will enable BISP to expand its coverage, particularly in health services for poor pregnant and lactating women and children under two years old. The programme will now extend these services to all districts in Khyber-Pakhtunkhwa and Balochistan.

Nutrition Services

Free nutrition services for adolescent girls will also be expanded from the current six districts in four provinces, Azad Kashmir, and Gilgit-Baltistan, to a broader range of regions.

Enhancing Climate Resilience

The programme aims to strengthen the capacity of nutrition health facilitation centres and raise climate change awareness, addressing its potential impacts on the targeted poor population.

Conclusion

The federal government’s approval of an additional $330 million loan for BISP underscores its commitment to supporting vulnerable populations. However, this move also highlights the ongoing challenges in balancing social welfare needs with fiscal responsibility and provincial autonomy. As Pakistan navigates these complexities, the successful implementation of BISP’s expanded initiatives will be crucial in achieving its poverty alleviation goals.

FAQs

What is the main purpose of the $330 million loan for BISP?

The loan aims to enhance poverty alleviation efforts by providing financial support for education, health services, and climate resilience for poor families.

Who funds the Benazir Income Support Programme?

The BISP is funded through international loans and grants, with significant contributions from the Asian Development Bank (ADB).

Why is there provincial resistance to taking over BISP?

Provincial resistance, particularly from Punjab and Sindh, stems from their high beneficiary counts and potential administrative challenges.

How will the loan address climate change impacts?

The loan will fund initiatives to raise climate change awareness and strengthen the capacity of nutrition health facilitation centres.

What are the concerns regarding Pakistan’s debt sustainability?

The reliance on foreign loans for social welfare, rather than investment in financially returnable sectors, raises concerns about long-term debt sustainability.