$430 Million ADB Loan to Help Pakistan Expand Social Safety Nets

News Release | 22 October 2013

MANILA, PHILIPPINES – The Asian Development Bank (ADB) has approved a $430 million equivalent loan to expand and strengthen Pakistan’s national social safety net program, which is helping to lift millions of families out of poverty.

“Broadening coverage of the cash transfer program and improving the health and skills training components will help reverse the cycle of intergenerational poverty that afflicts so many low income families,” said Michiel Van der Auwera, Financial Sector Economist in ADB’s Central & West Asia Department. “Better management and targeting of assistance will also ensure precious resources reach the most vulnerable households.

Pakistan’s official poverty rate was 22.3% in 2006 but since 2007 food and fuel price spikes, floods, and the global financial crisis have pushed vulnerable families back into poverty. The government has increased its social protection spending to counter these challenges, but the needs remain acute.

The loan for the Social Protection Development Project will support the state-run Benazir Income Support Program to expand the national cash transfer program, which is paid quarterly to the mother in each poor household. It will also broaden and improve a pilot health insurance scheme and skills development program.

The program, launched in 2008 with ADB support, has identified 7.2 million families for cash transfer assistance, but about 2.4 million cannot receive payments because women do not have the necessary national identity cards. To speed up access to cash transfers for more eligible families, ADB will support mobile teams who will collect information and issue the national ID cards needed to access funds. Health insurance for the poor will help protect families against catastrophic health costs and improve access to health facilities. Skills development will improve income-generating capacity and boost resilience to shocks for the poor. In addition, the project will support the strengthening of financial management systems to ensure resources are effectively delivered to those who need them.

The project, which will cost more than $578 million and include a contribution of more than $148 million from the Government of Pakistan, will run for about five years with an estimated completion date of December 2018. ADB’s assistance will come from its concessional Asian Development Fund.