The government's increasing reliance on external financing to run Benazir Income Support Program (BISP) will significantly increase country's foreign borrowing, which is already around $60 billion. Well-placed sources told Business Recorder here on Thursday that the main purpose of BISP is to strengthen the social safety net of the poor in Pakistan.
"The World Bank and the Asian Development Bank (ADB) are among the two major financers of the BISP. Obviously, the financing made by these two banks is 'loan-based' not based on grants. ADB has so far disbursed 150 million dollars for BISP while the World Bank has already provided a loan of $60 million to BISP through Social Safety Net Technical Assistance Project (SSN TA).
Recently, the World Bank cancelled the second tranche of Social Safety Net Development Policy Credit (US $50 million) but recommitted this amount to Additional Financing for the scale up of Social Safety Net Project being implemented by the BISP. This new project envisaging US $150 million was approved by the World Bank's Board of Executive Directors on March 6, 2012 and the Project Agreements have been signed on March 26, 2012," sources further revealed.
"USAID had also promised to provide financial assistance of $150 million to BISP. In this regard, USAID has already disbursed $85 million to the program while the rest of the grant of $75 million is yet to be disbursed during the current fiscal year 2011-12", sources added.
A senior official of BISP told this scribe on condition of anonymity that BISP has disbursed Rs 106 billion (around 1.1 billion dollars) to its beneficiaries since its inception. Sources also said: "it is true that the Ministry of Finance has already shown serious concern over reliance on foreign borrowing for BISP that could lead to the increase in the overall foreign debt of the country.
In case the Pakistan Peoples' Party (PPP) does not succeed in the coming general election then what would be the future of the BISP. How would the government be able to make repayments to the World Bank and ADB against the loans received under the program is also a big question?"