ISLAMABAD: Pakistan missed by a large margin an indicative target (IT) pertaining to Benazir Income Support Programme (BISP) set by International Monetary Fund (IMF) in financial year 2021-22: the floor on targeted cash transfers spending of BISP— mainly because of a slower-than-envisaged enrolment into the unconditional cash transfer (UCT) Kafalat Programme, and an “earlier-than-programmed phasing-out of the emergency cash transfer programme on account of an improved COVID-19 trajectory.”
This was noted by the IMF in its report on Combined Seventh and Eighth Reviews of the Extended Arrangement under the Extended Fund Facility (EFF).
In the report, the IMF cautioned against the “introduction of new programmes which can undermine protection of the most vulnerable. Continuing to mobilise additional revenue and careful expenditure management remain critical to creating the necessary space, while keeping public debt on a downward trajectory.”
More efforts are needed to reduce poverty, enhance social programmes and protect the most vulnerable by building fiscal space and improving coordination, the report argues.
The IMF reiterated the need to enhance transfers to families already covered by BISP, especially in a high inflation environment, and welcomed Pakistan’s plans to continue with the targeted expansion of the BISP beneficiary base, it restated the importance of improving a well-targeted social safety net programme (BISP) through a comprehensive, fully financed, and coordinated up-scaling.
In FY2021-22, BISP spending increased to 235 billion rupees—exceeding FY 2020-21 executions by 21 per cent but still falling six percent short of FY 2021-22 budget envelope; thus missing the related end-June 2022 IT, according to the document.
This under-execution reflects lower-than-projected COVID-related Ehsaas Emergency Cash (EEC) transfer spending and a slower-than-envisaged horizontal expansion of Kafalat Programme (by 0.7 million families instead of 1 million families to now 7.7 million families), the report pointed out.
In FY 2022-23, Pakistan raised budget allocation for regular BISP spending to Rs 316 billion, marking an almost 40 percent increase compared to last FY.
This will allow for a further expansion of the Kafalat Programme to nine million families by the end of this fiscal year using the National Socio-Economic Registry (NSER) finalised in October 2021, mentions the document.
However, according to IMF, Kafalat’s current generosity level still remains low at about nine percent of the average consumption level of the bottom quintile, compared to a global best practice of 25 per cent.
IMF has called for fully executing the FY 2022-23 envelope, finding fiscal space to further increase Kafalat stipend to achieve a “meaningful generosity level.”
On the other hand, Pakistan, the IMF says, has assured that it plans to “build on World Bank advice and seek ways to find fiscal space to also implement a meaningful improvement of the still low BISP Kafalat generosity level.”
Government authorities further informed the IMF that it permanently expanded both the horizontal coverage and benefit level of Kafalat Programme.
“Concretely, we have implemented— a targeted expansion of the Kafalat beneficiary base on the basis of the recently finalised NSER database to 7.7 million households by mid-June 2022 (even if slightly falling short of our objective of 8 million families)— the programmed permanent 8.3 percent increase in the six-monthly Kafalat stipend to Rs 13,000 per family on February 1, 2022, and –an additional permanent 7.7 per cent increase in the six-monthly Kafalat stipend to Rs 14,000 per family on March 1, 2022 as part of the previous government’s February relief package (worth Rs 8 billion),” IMF was informed by government, according to the report.
Additionally, Pakistani authorities have reviewed experience with some new programmes outside of BISP and decided to retire the Ehsaas Rashan Riyat Programme (ERR), the report notes.
Copyright Business Recorder, 2022