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ISLAMABAD: The International Monetary Fund (IMF) has warned that the launch of new programmes outside Pakistan’s “flagship” programme BISP (Benazir Income Support Programme) “risks undermining a comprehensive, fully financed, and coordinated scaling-up of a well-targeted social safety net.”

This was noted in the IMF’s 2021 Article IV Consultation, and Staff Report on the Sixth Review.

“Reducing poverty and boosting social protection requires greater coordination and efforts to increase fiscal space. Staff supports the scaling-up of social spending, and welcomed the finalisation of the NSER (National Socioeconomic Registry) update, which is already being used to support a targeted expansion of the BISP beneficiary base and analysing the needs of the vulnerable to customize more effective programmes.

At the same time, staff cautioned about the launch of new programmes outside the authorities’ flagship programme BISP, which risks undermining a comprehensive, fully financed, and coordinated scaling-up of a well-targeted social safety net,” the report notes.

The report further notes that (Pakistan’s) authorities agreed on the need to ensure full and transparent financing for, and execution of, the two new schemes in a sound and transparent way outside BISP notably (i) Kamyab Pakistan Programme (KPP) of 1.63 trillion rupees that seeks to promote small and medium enterprises (SMEs), agriculture, and low-cost housing financing through highly subsidized loans backed by a 50 per cent government guarantee (paripassu) that aims to reach up to three million households and (ii) food subsidy programme that seeks to provide a monthly stipend to 20 million low-income households (covering three products that account for about a quarter of their food layouts).

The supplementary budget supports a sizable scaling-up of development and social spending from their fiscal year 2021 outturn, including through: (i) a substantial expansion of BISP by 50 percent (excluding Covid-related one-off spending) and spending on health and education by 27 percent; and (ii) the newly launched KPP and food subsidy programme of 0.2 percent of GDP (gross domestic product).

According to the report, two ITs and (ii) the gross issuance of longer-term debt instruments (i.e. Pakistan Investment Bonds, Sukuks, and Eurobonds) mainly because of low investor appetite for longer-term instruments and bottlenecks in the issuance of Sukuks.

Pakistan, the report notes, missed the targeted cash transfer spending (BISP) by a small margin because of the reallocation of some spending (Rs 5 billion) to a different government authority (i.e. the Pakistan Poverty Alleviation and Social Safety Fund).

The document says that Pakistan’s has reiterated its committed to expanding social safety nets and reducing poverty. “The Covid-19 pandemic has laid bare the disparities facing our vulnerable population, which we need to address to foster inclusive growth and ensure that our country becomes more resilient to future shocks. To this end, we are advancing efforts to strengthen our social support,” the report quotes government authorities.

The government officials also assured the IMF of their commitment to the timely publication of: (i) key information of all Covid-related awarded procurement contracts on the publicly accessible website of the Public Procurement Regulatory Authority and (ii) an ex-post audit by the Auditor General of Pakistan (AGP) of the procurement of Covid-related supplies and social payments in FY 2020. Further efforts underway include the audit of all Covid-related spending and social payments for FY 2021, the rollout of an e-procurement system by end-2022 (supported by the World Bank), and the issuance of regulations to collect and be able to publish beneficial ownership information of companies awarded Rs 50 million and above public procurement contracts, the report says.

Copyright Business Recorder, 2022

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