Pakistan’s social protection spending declined by 7.5 per cent during the first five months of fiscal year 2026, despite increased budgetary commitments under the International Monetary Fund (IMF) programme, according to the Ministry of Finance. The reduction comes at a time when the government continues to project moderate inflation and sustained economic momentum for the ongoing fiscal year.
In its January Economic Update and Outlook, the Ministry of Finance reported that total spending under the Benazir Income Support Programme (BISP) stood at Rs144.9 billion during the July–November FY26 period. This compares with Rs156.7 billion spent during the same period in the previous fiscal year, reflecting a noticeable decline in disbursements aimed at social protection and income support.
The report noted that the reduction in spending occurred despite explicit commitments under the IMF programme to expand unconditional cash transfers. As part of the agreed structural benchmarks, the BISP Kafaalat cash benefit is scheduled to increase from Rs13,500 to Rs14,500 by the end of January 2026. In addition to higher transfer amounts, programme coverage is required to expand by 200,000 households, bringing the total number of beneficiary families to 10.2 million by the end of FY26.
The Ministry of Finance did not provide detailed reasons for the lower spending during the initial months of the fiscal year. However, the figures suggest a slower pace of disbursements relative to the previous year, raising questions about the timing and implementation of planned social protection enhancements under the IMF-supported programme.
Despite the decline in social spending, the ministry maintained a positive outlook on the broader economy. The update stated that Pakistan remained positioned to sustain growth momentum during FY26, supported by improved performance in large-scale manufacturing (LSM) and other high-frequency economic indicators. The ministry attributed the improving outlook to easing inflationary pressures, ongoing structural reforms, and more supportive monetary conditions.
According to the report, inflation is expected to remain within the 5 to 6 per cent range in January, reflecting a continued moderation in price pressures compared to the elevated levels observed in previous years. The contained inflation environment is seen as providing some relief to households, even as social protection spending remains below last year’s levels.
The economic update further highlighted that macroeconomic stability persisted during the first half of the fiscal year. This stability was reflected in several key indicators, including controlled inflation, a recovery in large-scale manufacturing output, higher foreign exchange reserves, and a relatively stable exchange rate. These developments, according to the ministry, point to gradual strengthening in overall economic conditions.
Fiscal discipline was also cited as a contributing factor to macroeconomic stability. The report noted that fiscal and primary surpluses were achieved during the period under review, supporting the broader macroeconomic framework and reinforcing confidence in the government’s economic management.
While the ministry’s outlook emphasizes economic stabilization and recovery, the decline in social protection spending highlights the challenge of balancing fiscal discipline with commitments to expand welfare support under the IMF programme. As FY26 progresses, the pace of BISP disbursements and the implementation of planned benefit increases are expected to remain closely watched indicators of the government’s commitment to protecting vulnerable segments of the population amid ongoing economic reforms.
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