Poverty, Inequality and Social Safety Nets in Pakistan

• Pakistan has made significant improvements in reducing poverty over the last two decades
• Access to basic services has significantly improved above South-Asia average and further efforts are underway
• Children’s stunting and malnutrition remains a challenge
• Despite improvements, education and health outcomes remain below the regional average, with public spending in these areas comparatively lower than in other emerging markets.

Social Safety Nets, Targeting and Outcomes in Pakistan

• Social safety nets have a critical role to play to support and protect the most vulnerable in Pakistan
• The efficiency of social safety nets has been strengthened over time towards the implementation of best practices

Benazir Income Support Programme (BISP)

• The Benazir Income Support Program (BISP) is the main social safety net program, providing targeted cash transfers to the poorest families
• BISP’s targeting mechanism has been significantly strengthened over time and relies now on proxy means testing.
• The coverage and the size of cash transfers to the poor have increased over time
• BISP operations were also significantly strengthened thus improving service to beneficiaries.
• Several noncontributory social security and social welfare programs, managed by different Ministries, aim at meeting social welfare needs at the level of local communities

Policy Recommendations and Conclusions

• Significant progress has been made over the past decades to reduce poverty in Pakistan.
• Generating higher and more inclusive growth is the top priority to make a dent poverty and inequality

Supporting Growth and Inclusion through Financial Development

• The financial sector in Pakistan is diverse and growing, but remains small.
• Access to finance and the use of financial services in Pakistan have been rising from a low base and have significant potential for further improvement
• Financial development and inclusion have made progress over the past decades, with large potential for further improvement
• While Pakistan lags behind its peers in the level of development of financial institutions, recent trends show positive momentum
• Despite recent progress, the Pakistani financial sector remains shallow
• The financial depth index has begun to recover over the past three years
• The efficiency of the Pakistani financial sector has moved in sync with the business cycle and remains favorable
• While Pakistan has made considerable and sustained reform efforts, the level of financial inclusion has remained low

Fiscal Decentralization and Macroeconomic Challenges in Pakistan

• In 2010, Pakistan embarked on a path of significant fiscal and administrative decentralization
• International experience suggests that the design of fiscal federalism, more than the degree of decentralization, affects social and macroeconomic outcomes

The Macroeconomics of Pakistan's Quest for Energy and CPEC

• Over the past decade, Pakistan has faced chronic energy shortages and substantial underinvestment in infrastructure
• The authorities' reforms have led to notable improvement in recent years.
• Alongside, Pakistan has embarked on a wide-ranging initiative to increase and diversify its energy supply and improve infrastructure to help realize the country's growth potential.
• Exports will need to increase substantially to meet the increased foreign currency financing needs

An excerpt of the report can be read here.