In Pakistan poverty levels have reached a high of 40 percent, equivalent to those in Sub Sahara Africa, and hence there is a compelling need for domestic and international stakeholders to ensure that poverty alleviation measures are not only appropriate but effective in reducing this high rate.
What is noticeable in Pakistan’s recent engagements with the International Monetary Fund (July 2019 onwards) is a seismic shift on two counts.
First while the primary objective remained balance of payment support defined as “necessary fiscal adjustment and maintenance of debt sustainability via FY 24 budget implementation,” (noted in the May 2024 press release issued after the Executive Board approved the second and final review of the Stand-By Arrangement) yet the second stated objective was protection of critical social spending.
It is relevant to note that the government raised BISP allocation effective January 2024 to 3500 rupees per month as opposed to 2916 rupees per month before, on the advice of IMF; however, this rise was grossly inadequate given the average inflation rate of 23.41 percent July-June 2024 – a rate sourced to not only the Fund insistence on raising electricity and gas tariffs to achieve full cost recovery (which continue to be passed on to the consumers) as well as raising reliance on petroleum levy, an indirect tax whose incidence on the poor is greater than on the rich. Sadly, the 2024-25 budget passed reportedly after IMF approval envisages a rise in current expenditure and revenue, which remains heavily reliant on indirect taxes.
And secondly “in low income countries IMF lending is also typically meant to catalyse financial support from other donors and development partners” however this is no longer applicable in Pakistan’s case since 2019 when the Fund insisted that procuring assistance from bilateral/multilateral partners is the sole responsibility of the government.
Social protection programme was formally launched in 2008 by the Zardari-led government, titled Benazir Income Support Programme (BISP).
It envisaged cash disbursements to the vulnerable and the poor and after initial hiccups, read abuse of the programme in terms of allocating funds to loyalists rather than those who were eligible, it graduated into one that is appreciated both domestically and internationally.
While part of the reason could be multilaterals’ ownership of the programme, facilitated by monetary support, that gave them the leverage to insist on adoption of a universally acceptable mechanism to evaluate eligibility of beneficiaries, yet it was after Sania Nishtar’s appointment as BISP chair that the entity successfully developed a national socio-economic registry that empowered it to correctly and periodically reassess beneficiary eligibility.
Three observations on BISP are appropriate. First, the argument that Pakistani administrations are severely limited by resource constraints to allocate adequate funds to meet the needs of the rising numbers being pushed under the poverty level is very valid.
And it is a mark of BISP’s success that all civilian administrations since 2008, representing three different national political parties that are rhetorically and ideologically at odds with each other, increased the budgeted BISP allocation each year that leads one to conclude that a good programme backed by donor support has ownership across the political divide.
Second, even though the amount budgeted for BISP has increased each year yet its percentage allocation as a percentage of total current expenditure has not changed appreciably.
In 2023-24 the revised estimates for BISP were 466 billion rupees while in the current year 592.483 billion rupees have been budgeted – a rise of 27 percent but as a percentage of current expenditure it was 3.2 percent last year rising marginally to 3.4 percent this year.
In other words, other current expenditure items were prioritised and in the current year’s budget the following non-development items have witnessed a rise when compared to the revised estimates of 2023-24: civilian administration (11.4 percent), pensions (23.5 percent), mark-up (21 percent) on domestic borrowings used to finance non-development expenditure.
Thirdly, governments of all three national political parties opted to have parallel programmes under their unique signature to gain political mileage.
And in the event that a different political party succeeded in forming a government, these programmes were mercilessly axed (including the half way houses set up during the Khan administration).
BISP is the exception because it was established as an act of parliament and no government had the numbers to make any changes though Ishaq Dar as the finance minister would invariably drop the name Benazir when referring to the programme and the Khan administration tried to subsume it under its Ehsaas programme.
These signature programmes include PTI’s popular Sehat Sahulat card scheme, however international development specialists suggested actuarial studies every two years to determine the rising costs associated with inflation as well as the expected rise in the numbers using the facility.
Be that as it may, Khyber Pukhtoonkhwa Chief Minister Amin Gandapur re-instated the Sehat Card effective from the first of Ramazan, 10 March 2024, and released 5 billion rupees to the State Life Insurance Corporation. In the provincial budget announced on 25 May, Gandapur earmarked 28 billion rupees.
PML-N supports subsidies for transport (Metrobus service (with the Sindh government recently announcing that the pink bus scheme will be available to women free of cost for two months) and recently 20 buses are expected to provide transport to students in federal institutions, hospitals (including mobile medical units scheme launched by Maryam Nawaz Sharif), schools and housing schemes for the poor as did the other two national parties during their tenures.
And giving away free items - Shehbaz Sharif’s free laptop for students’ and free motorbikes for girls’ scheme whose architect is Maryam Nawaz Sharif.
This trend continues in spite of the fact that neither BISP nor these signature programmes have translated into victory at the polls.
The PPP government (2008-13) lost the general elections, though it retained Sindh government. PML-N (2013-17) failed to win the 2018 elections and though its clamour is that its leadership was unfairly targeted before the elections and the party’s electoral fortunes were held hostage to state sponsored rigging in Punjab few would challenge the emergence of PTI as a national party that made significant inroads in Punjab though it required and was delivered allies to form the government.
And the 8 February general election was even more divisive than the 2018 one.
To conclude, Martin Luther King’s statement comes to mind: True compassion is more than throwing a coin to a beggar. It demands of our humanity that if we live in a society that produces beggars, we are morally commanded to restructure that society. That requires abandonment of the existing priorities as well as flawed economic policies reflected in the budget 2024-25 that continues to support elite capture in terms of not only expenditure outlay but also the resource pool.
Copyright Business Recorder, 2024
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