Pakistan missed the end-June 2025 quantitative performance criteria floor on total Benazir Income Support Programme spending by Rs463 million, equivalent to 0.0004% of gross domestic product, due to savings on administrative costs, according to the International Monetary Fund’s latest staff report on the country.
The report said spending on BISP’s core support programmes was higher than expected, but the overall target was missed because of lower administrative expenditure. Pakistan has requested a waiver from the IMF, describing the non-observance as minor and temporary.
In its letter of intent submitted by the finance minister and the governor of the State Bank of Pakistan, the authorities said three end-June 2025 indicative targets were met, while shortfalls in other targets highlighted the need to improve tax administration and provincial spending on health and education. The letter said steps were being taken to strengthen implementation capacity at the Federal Board of Revenue and in the provinces.
The IMF report noted that the current year’s BISP budget includes a 20% increase in spending on unconditional and conditional cash transfer programmes. This will allow the quarterly Kafaalat benefit to rise from Rs13,500 to Rs14,500 by end-January 2026 to adjust for inflation.
Within the same budget envelope, Kafaalat coverage is expected to increase by at least 200,000 families, reaching 10.2 million households by the end of FY26.
The Fund said that once a new Household Integrated Economic Survey becomes available in 2026, Kafaalat benefit levels should be gradually increased toward 15% of the consumption basket of the lowest income quintile, while continuing inflation adjustments.
The IMF stressed the need for continued coordination between BISP and provincial authorities on conditional cash transfer programmes to avoid duplication, maintain a common beneficiary base through the National Socioeconomic Registry, and apply consistent eligibility criteria.
The report also noted that reduced power subsidies have created space for higher spending on social protection. With World Bank support, progress has been made in matching electricity consumers with BISP databases to better target cash transfers.
According to the IMF, Pakistani authorities said work is under way on electricity subsidy reform, planned for completion by end-January 2027. The reform would replace the tariff differential and cross-subsidy system with a targeted, budgeted subsidy for low-income consumers delivered through BISP.
The authorities told the Fund that linking electricity consumer data with the National Socioeconomic Registry is expected to be completed by end-December 2025, followed by analysis to set eligibility criteria by end-July 2026 and a national communications campaign. Similar work has been initiated in the gas sector, alongside plans to introduce minimum energy performance standards for household appliances by end-June 2027.
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