Increase in Benazir Kafalat Program Stipend Approved by IMF

The International Monetary Fund (IMF) has approved a significant increase in Benazir Kafalat Program stipend, providing enhanced financial assistance to low-income families in Pakistan. This decision underscores the IMF’s commitment to supporting Pakistan’s social safety nets.

Revised Stipend Amount

Effective January, the stipend for beneficiaries will see a notable rise. The quarterly payment will increase by Rs. 3,000, bringing the total to Rs. 13,500 from the current Rs. 10,500. This increase in Benazir Kafalat Program stipend is expected to benefit millions of families across the country.

Enhancements and System Improvements

Budget Allocation and Reforms

The Benazir Income Support Program (BISP) has been allocated a budget of Rs. 599 billion for the current fiscal year, representing 0.5% of Pakistan’s GDP. This is a 27% increase compared to last year’s allocation.

Enrollment and Payment Modernization

Efforts are underway to enhance the efficiency and accessibility of the program:

• Open Enrollment: The program will accept new participants over the next three years.
• Electronic Payment System: A new digital payment model is being introduced to improve banking options and transparency. This system will be piloted in select areas starting January and rolled out nationwide in phases.

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Context of the IMF Loan Agreement

Economic Goals and Stipend Increase

The increase in Benazir Kafalat Program stipend aligns with the conditions of a recently approved IMF loan for Pakistan. The IMF has urged Pakistan to stabilize its economy by implementing key reforms, including:

• Expanding the tax base.
• Reducing unnecessary government expenditures.
• Accelerating reforms in state-owned enterprises.

Projections and Economic Impact

The IMF projects Pakistan’s GDP growth to range between 4% and 4.5% over the next six years, with inflation expected to stabilize between 6.6% and 9%. The increase in Benazir Kafalat Program stipend is part of broader efforts to strengthen economic resilience.

Extended Fund Facility and Financial Support

On September 25, the IMF approved a 37-month Extended Fund Facility (EFF) for Pakistan, amounting to US$7 billion. The program’s objectives include sustainable public finances, reduced inflation, and enhanced financial buffers.

First Tranche Received

Pakistan received its first EFF tranche of USD 1.026 billion on September 27. This funding supports measures such as the increase in Benazir Kafalat Program stipend, which aims to protect vulnerable communities while fostering economic stability.

The IMF’s decision to approve the increase in Benazir Kafalat Program stipend highlights the program’s critical role in mitigating poverty and addressing Pakistan’s socio-economic challenges.