Fiscal Space for Special Protection in Pakistan
Published - Dec 1, 2014Social protection has received a great deal of attention and interest in Pakistan since the launch of the Benazir Income Support Programme (BISP) in 2008. In 2012-13, the government’s expenditure on social assistance, a component of social protection, amounted to Rs180 billion or 0.8% of Pakistan’s gross domestic product (GDP). This included cash transfers, food subsidies, social and welfare services, and expenditure related to natural disasters and public works programs. Expenditure on social assistance programs in Pakistan is considerably lower than the median spending on safety assistance in developing and transition countries.
With fiscal deficit at 8% of GDP in 2012-13, expanding the social protection program has the potential of further compounding the financial difficulties of the government. This paper maintains that although reducing the fiscal deficit is important – not least because the recourse to money printing continues to erode the real value of income transfers to the poor – the answer does not lie in expenditure cuts or freezing of expenditure on social protection programs. It is argued that fiscal space for social protection can and should be created through other options, including reform of energy prices, reduction in the losses of public sector enterprises, improvement of economic governance to restore economic growth to its historical levels, increase in the tax-to-GDP ratio, and public-private partnership.
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Nasim, A. (2014). Fiscal Space for Special Protection in Pakistan. Working Paper No. 01-14. Institute of Development and Economic Alternatives (IDEAS).