ISLAMABAD: The federal government, struggling with cash shortages, has approved a loan of $330 million (Rs92 billion) for the Benazir Income Support Programme (BISP) beneficiaries.
This approval coincides with the International Monetary Fund’s (IMF) renewed emphasis on transferring the responsibility of social protection to the provinces, which are more financially stable.
The Central Development Working Party (CDWP), chaired by Planning Minister Ahsan Iqbal, approved the concept paper for the Integrated Social Protection Development Programme (ISPDP), which will secure additional financing of $330 million. The loan will serve as budget support to boost the central bank’s reserves, and the rupee cover will be used for cash disbursement to BISP beneficiaries.
This loan is being acquired from the Asian Development Bank (ADB), which has already provided $600 million for the BISP. The ADB will charge around 2% interest on the loan in dollar terms. Of the $600 million, approximately $500 million has already been spent. The BISP currently provides unconditional cash benefits to 9.3 million families, excluding never-married women to avoid duplication, as the program targets women with families.
Although the constitution mandates social protection as a provincial responsibility, the provinces have refused to take ownership, and this has led to its exclusion from the National Fiscal Pact recently signed. Resistance primarily came from Punjab and Sindh, the largest beneficiaries of the program.
The aim of the cash transfers is to alleviate poverty, but critics argue that taking foreign loans for this purpose could worsen debt sustainability issues, especially if loans are not invested in income-generating sectors.
Recently, Pakistan requested China to reschedule a $3.4 billion project debt after struggling to meet its liabilities maturing between October 2024 and September 2027.
In a statement following an emergency visit, IMF Mission Chief Nathan Porter emphasized the importance of continued prudent fiscal and monetary policies, as well as revenue mobilization from untapped sources. He also reiterated the need for greater social and development responsibilities to be shifted to the provinces.
Just hours before Porter’s statement, the CDWP had approved the $330 million loan. This financing will cover some of the BISP needs for 2025 to 2028, with a focus on enhancing institutional capacity for social protection and climate resilience.
The loan will help provide primary and secondary education for children in poor families, offer health services, and provide nutrition supplies to women, girls, and children. The financing will also help the children of poor families complete general secondary school education up to grade 12, and offer non-formal basic education and accelerated learning programs for out-of-school children.
Additionally, the funding will strengthen BISP’s support for women, children, and adolescent girls, while addressing climate change’s potential impact on nutrition. The plan also includes expanding free health services for poor pregnant women, lactating women, and children under two years old in Khyber Pakhtunkhwa and Balochistan. The coverage of free nutrition services for adolescent girls will be extended from six districts to all districts in these provinces, as well as Azad Kashmir and Gilgit-Baltistan.
The loan will also fund efforts to raise climate change awareness and enhance the capacity of nutrition health facilitation centers.
