ISLAMABAD: Even though Pakistan spent Rs 404 billion or 0.4 per cent of its gross domestic product (GDP) on regular and exceptional Benazir Income Support Programme (BISP) schemes in last financial year 2022-23, the education and healthcare spending remained below budgeted targets because of “weak budget planning and execution,” reveals the latest report issued by the International Monetary Fund (IMF).
According to the IMF country report, Pakistan’s spending on BISP in the last financial year exceeded the FY 2021-22 executed level by more than 70 per cent. The report says the enlarged BISP envelope mainly allowed for: (i) a full execution of all regular BISP schemes; (ii) a faster-than-envisaged enrolment of one million newly identified families into the UCT (unconditional cash transfer) Kafalat programme (now covering nine million families) on the basis of the live National Socio-Economic Registry (NSER); (iii) an inflation adjustment of the UCT Kafalat stipend (25 per cent) to Rs 8,750 per family and quarter, effective from January 1, 2023; and (iv) an exceptional one-off emergency cash transfer of Rs 25,000 to more than 2.7 million flood-affected regular BISP families in FY 2022-23.
However, education and healthcare spending remained below budgeted targets because of weak budget planning and execution (in parts undermined by temporary school closures in the aftermath of the 2022 floods), the document states.
The document notes, in view of the high inflation and resulting threats to food security, the Pakistani authorities increased BISP budget allocation to Rs 472 billion (0.4 per cent of GDP) in the current FY 2023-24, which about 1/3 above the executed regular BISP spending in FY 2022-23 (excluding one-off transfers for floods).
This increase will not only allow Pakistan to accommodate all current
BISP programs, but also to absorb: (i) an additional 300,000 families in the UCT Kafalat programme from July 2023; and (ii) the regular inflation adjustment of the UCT Kafalat stipend from January 2024.
However, given Pakistan's “still inadequate level of social spending, weak socio-economic outcomes, and the ongoing cost-of-living crisis,” the IMF has called on Pakistani authorities to “continue to protect the most vulnerable through lifeline and protected power and gas tariff slabs and work toward their medium-term priorities with support from development partners.”
The IMF report says a higher BISP envelope still strictly targeted at the most vulnerable and monitored through a quantitative performance criteria under the standby arrangement -supported programme should help: (i) achieve a more meaningful UCT Kafalat generosity level; (ii) accelerate enrolment into the conditional cash transfer (CCT) schemes for child education and health, which will also enhance school enrolment rates of girls; (iii) align CCT stipends with actual schooling and food costs, and (iv) ensure an adequate budgetary contingency to address exogenous shocks.
Over the longer term, a targeted BISP scheme should also replace the protection of the most vulnerable currently built into the power and gas price structure through highly subsidized lifeline and protected slabs for small consumers.
Copyright Business Recorder, 2023
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