Alas, we have now come to realize that we have to live with the coronavirus for the years to come. But with the economic impacts gone awry, one can clearly say that, like this virus, poverty knows no geographical boundaries. Recent figures on predicted poverty after Covid-19, as provided by Pakistan Institute of Development Economics, show three scenarios with regards to the poverty wave hitting Pakistan; for a low-impact scenario, the poverty rate will be 23.4% to 33.7%; 44.2% for a medium-impact scenario, and 58.6% for a high-impact scenario. In the worst case, 125 million Pakistanis can be pushed into poverty.
Pakistan became a signatory to Sustainable Development Goals (SDGs) in February 2016. Although the current government promised to fight poverty in their election campaign, the pandemic has exacerbated Pakistan’s macroeconomic impediments which will put a halt in our traction of SDG 1. This goal calls for ending poverty in all its forms by 2030.
Pakistan’s Performance of SDG 1
The Cost of Basic Needs (CBN) approach is the official measure of poverty used in Pakistan, whilst not utilizing a monetary measure to define poverty because of its fluctuations. This measure takes food and non-food expenditures, like clothing, shelter and education, into account. A new national poverty line of Rs 3030.32 per adult equivalent per month was set in 2013-14. Pakistan Economic Survey (2017-18) shows that according to this definition, the percentage of people living below the poverty line have declined from 50.4 percent in 2005-06 to 24.3 percent in 2015-16. If similar trends persist, this would go in line with the indicator 1.2.2 of SDG 1, which commits us to reduce at least by half, the proportion of men, women and children of all ages living in poverty, in all its dimensions according to national definitions.
Current and preceding holders of office have directed sustained efforts on Social Safety Nets (SSNs). These SSNs included programs such as Ehsaas, Benazir Income Support Program (BISP), and Pakistan Poverty Alleviation Fund notably. This goes in accordance with indicator 1.1.3 which deals with the proportion of population covered by social protection floors/systems. Social safety nets can be in the form of conditional or unconditional cash transfers, in-kind food transfers, school feeding, pensions and disability benefits, etc. They have been used widely by many countries to tackle poverty. Developing and transition economies spend about 1.5 percent of their GDP on social safety net programs. Keeping in view the yearly economic situation, one can question that is it ambitious enough to spend on infrastructure as much as on reducing poverty and inequality? Can we progress in the combat against poverty with this looming notion of inequality?
Figure 1: PRSP Budgetary Expenditures by Sector (Source: Ministry of Finance, External Finance Policy Wing) *Provisional (2018-19)
The poverty alleviation program, Ehsaas, was introduced in March 2019. With the onset of the lockdown, Ehsaas Emergency Cash (EEC) Programme was launched to provide immediate cash payments to 12 million households to sustain the crisis. For this, the government extended its reach to 78 million people, which makes up 32 percent of the total population of the country. BISP, which was initiated in 2008 has evolved over the years with its current cash grant amount at Rs 5000/- and its number of beneficiaries at 9.10 million. Not being affected by a change of governments, this program’s budgetary allocation increased from Rs 72 billion at its inception to Rs 180 billion in the FY 2020. The World Bank, Department for International Development (DFID) and Asian Development Bank (ADB) all provided credits to BISP at different points in time. A similar strategy for international funding might come in handy for Ehsaas and other social safety nets also.
Figure 2: BISP Financial Achievements (Total Grants and Number of Beneficiaries respectively) *Provisional (2019-20)
The Way Forward
After the 18th Amendment, there is a looming detachment between the SSNs that come under the federal and provincial governments. The National Socio-Economic Registry (NSER) that BISP currently employs to target households can be used at a larger scale to avoid duplicates between different programs offered by both tiers. This could enable an increase in the number of beneficiaries, provided we also timely update the demographic changes in NSER.
Government has increased its spending on social safety nets during Covid-19, but the Prime Minister stated that Pakistan has already lost Rs 800 billion as revenues. Accordingly, it will be a silver lining if both BISP and Ehsaas could focus on developing more programs incorporating conditional cash transfers, like the already existing Waseela-e-Taleem program of BISP. For the future also, such transfers can prepare us for disasters by working on creating sustainable livelihoods of the vulnerable groups.
For a developing country like Pakistan, where financial literacy is low by global and regional standards, the learning curve of beneficiaries should be kept in mind, while they enroll or receive cash payments. Alongside this financial literacy, efforts have to be made at awareness of such programs in remote areas. The latest collaboration between a leading private bank and the country’s Postal Service is a good step in this direction. People living in slums often do not have identification cards. Moreover, around 2.5 million Afghan refugees who live in the capital city of Pakistan as registered or undocumented refugees, also cannot fundamentally qualify for social safety nets. We need efforts at supporting such people, who have been excluded from these programs.
It is essential at this time to awaken our pro-poverty instincts. We need to envisage our policies in such a manner to deal with the third and final part of the Extended Fund Facility program by the IMF, whilst keeping in view our shrinking tax collections and predicted low economic growth. Global isolation is a deception. Political will and enhanced private and international cooperation can help us achieve the required social safety nets funding to sustain the livelihoods of many during and in the aftermath of this epidemic.