Linking energy aid to BISP could help Pakistan target support more effectively, rein in circular debt, and unlock funds for broader social programs
By S.M. Inam/Mehrab Shah Afridi
ISLAMABAD: The World Bank has reported that Pakistan has begun linking electricity and gas subsidies to the Benazir Income Support Program (BISP), a move aimed at improving the efficiency of social assistance while reducing long-standing fiscal losses.
According to a recent report on South Asian development, this approach forms part of a broader effort by the government to ensure that support reaches the households that need it most, while also addressing the chronic financial strains associated with energy subsidies.
The report highlighted that by tying energy assistance to BISP, Pakistan could achieve more targeted distribution, curb the growth of circular debt, and free up funds that could be redirected toward other social protection programs.
Officials noted that the adoption of digital systems within BISP had already strengthened the program’s ability to deliver aid and monitor beneficiaries more effectively, reducing leakages and improving accountability.
Alongside energy reform, the World Bank urged Pakistan to strengthen its tax framework, broaden the tax base, and consider policies that discourage environmental pollution as a means of boosting revenue.
These fiscal recommendations come at a time when the country is grappling with multiple economic pressures, including rising public debt and the need for sustainable development. The report also drew attention to Pakistan’s acute water scarcity, describing the country as one of the world’s most water-stressed nations.
Rapid depletion of underground water reserves, outdated irrigation infrastructure, and traditional agricultural practices have contributed to significant water loss, particularly in rural areas. In contrast, modern irrigation projects in Punjab were reported to have saved 57 per cent of water, while advanced farming techniques improved crop yields by between 14 and 31 per cent, illustrating the potential gains from investment in water-efficient technologies.
Additionally, the World Bank noted the establishment of a climate risk facility designed to support small businesses affected by recurrent floods. This initiative aims to build resilience against climate-related shocks, complementing the government’s broader social protection efforts.
The report underscored that Pakistan’s integration of targeted energy subsidies with social programs, combined with water management reforms and climate risk measures, represented a step toward more sustainable governance.
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