Since 2007-08 the economy has been under considerable pressure due to both domestic and external developments. The global financial crisis hit the country hard when it was already facing a balance of payments crisis stemming from high food and fuel prices in the world markets. The combined effects of the global food and fuel crises adversely affected the economy resulting in unsustainable current account and fiscal deficits and unprecedented high inflation. Moreover, the unstable law and order situation in the country and struggle against extremism put severe strains on the government’s finances. These adverse developments led to the signing of an IMF Standby Arrangement Programme. The catastrophic floods of 2010 and 2011 further exacerbated the situation. The floods led to a huge loss of life in 2010, affecting approximately 20 million people directly and a much larger proportion indirectly. Moreover, the huge damage to crops and infrastructure also severely affected the economy at large, which disrupted the supply chain and business activities in the affected areas. This supply shock resulted in high inflation. The floods of 2010 were followed by the rains of 2011, which though of lower intensity compounded the negative impact on the economy and added to the pressures on prices and the welfare of the people.
Social Safety Programmes
Recognizing the need to protect the poor and the vulnerable, the government has launched several safety net programs. The following social safety net programs in particular minimize the adverse effects of poverty on the targeted population of the country.
I. Pakistan Poverty Alleviation Fund
The Pakistan Poverty Alleviation Fund (PPAF) is a flagship element of country’s poverty reduction strategy. It is sponsored and supported by the government with an endowment of Rs. 1,000 million and funded by the multilateral and bilateral donors like World Bank, International Fund for Agricultural Development, KfW Financial Cooperation Germany, US Department of Agriculture, Italian Government etc. The funding provided to PPAF is dedicated for micro credit, enterprise development, community based infrastructure and energy projects, livelihood enhancement and protection, social mobilization, and capacity building institutional assistance for the partner organizations of PPAF.
The overall operational and financial outreach during the half year ended December 2011 remained satisfactory. Total disbursements for core operations during the period were Rs. 8,490 million. Loan (micro credit and enterprise development facility) disbursements were Rs. 6,766 million; water and infrastructure disbursements were Rs. 365 million; disbursements for education and health were Rs. 361 million; capacity building disbursements were Rs. 438 million; social mobilization disbursement were Rs. 220 million; and disbursements for livelihood enhancement and protection were Rs. 339 million. In addition to disbursement for core operations, Rs. 576 million (Rs. 273 million from donors' funding and Rs. 203 million from PPAF's own resources) was disbursed for project and flood relief activities.
By the end of December 2011, the total cumulative disbursements were Rs. 100 billion. Credit and enterprise development accounted for 59 percent of total disbursements followed by relief, rehabilitation and reconstruction activities (20 percent); community physical infrastructure (10 percent); human and institutional development (including social mobilization) (7 percent); livelihood enhancement and protection (1 percent); and health & education (3 percent). PPAF interventions are being carried out nationwide with 50% of the resources deployed in Punjab, 19 percent in Sindh, 16 percent in Khyber Pakhtunkhwa, 4 percent in Balochistan; 9 percent in Azad Jammu and Kashmir; 1 percent each in Gilgit Baltistan and Islamabad Capital Territory.
By the end of December 31, 2011, PPAF funding had been disbursed in urban and rural areas of 129 districts of the country (about 297,000 community organizations / groups) through 114 partner organizations of which 12 were focusing exclusively or predominantly on women. On cumulative basis, PPAF has financed 5,352,838 micro credit loans. More than 27,417 infrastructure, health and education projects were initiated and a total of 488,249 staff and community members were trained. In earthquake affected areas, PPAF provided financing to 122,000 households to build earthquake resistant homes and trained over 108,000 individuals in seismic construction and related skills.
II. Pakistan Bait-ul-Mal
Pakistan Bait-ul-Mal (PBM) is making a significant contribution towards poverty reduction through its various poorest of the poor focused services such as providing assistance to destitute, widows, orphans, invalid, infirm and other needy irrespective of their gender, caste, creed and religion. The following are the ongoing core projects/schemes:
a. Individual Financial Assistance (IFA): It is one of its major social dispensation programme to provide financial assistance to destitute and needy widows, orphans, invalid, infirm and other needy persons, to provide for free medical treatment for indigent sick persons, to provide stipend and financial assistance to brilliant but poor students. Under this head PBM has provided financial assistance of Rs. 734.901 million up to February 2012 and 13,171 beneficiaries from all over the country have benefitted from this scheme.
b. Child Support Programme (CSP): This is a cash transfer programme, in which cash incentive is provided to the parents for sending their children to schools. Rs. 300 per month is paid to the families with one child and Rs.600 per month to the families with two or more children of school age. Currently the programme is running in 12 districts. An amount of Rs. 66.754 million has been disbursed up to February 2012.
c. National Centres for Rehabilitation of Child Labour (NCsRCL): PBM has a proactive child labour rehabilitation policy and number of initiatives has been taken for the better`ment of working children. Efforts have been made to withdraw them from work places with a view to their mainstreaming into education by undertaking programmes for non-formal education. 159 centres have been established throughout the country on which Rs. 248.681 million has been spent up till February 2012.
d. Vocational / Diversified Vocational Dastkari Schools (V/DVDS): PBM has established Vocational / Diversified Vocational Dastkari Schools (VDS/DVDS) where poor widows, orphans and needy girls are given training in a variety of skills to make them self-sufficient to earn their livelihoods in a respectable manner. PBM has established 144 VDS and 15 DVDS throughout the country on which Rs. 93.876 million has been spent up till February 2012.
e. Pakistan Sweet Homes (PSHs): PBM has established Sweet Homes for Orphans having accommodation for 100 children in each home. A total of 28 Pakistan Sweet Homes (Orphanages) have been established so far on which Rs. 133.475 million has been spent up till February 2012.
f. Langer Programme: PBM is also working for provision of assistance to needy persons. It provided ration bags to those affected by natural disasters such as the floods of of Sindh and of KPK. In this regard an amount of Rs. 185.306 million expenditures were incurred up to February 2012.
