By Ayesha Saba

Nearly 5,800 interest-free loans worth Rs413 million were disbursed across Pakistan in July 2026 under a poverty alleviation programme aimed at improving access to finance and supporting income-generating activities among low-income households.

According to the Finance Division’s Monthly Economic Update & Outlook – August 2026, available with Wealth Pakistan, the Pakistan Poverty Alleviation Fund (PPAF), in collaboration with 24 partner organisations, disbursed 5,778 interest-free loans during the month.

The value of loans disbursed in July amounted to Rs413 million, providing financing to beneficiaries under the interest-free lending programme.

The latest disbursements took cumulative interest-free lending under the programme to Rs126.67 billion since 2019, reflecting the scale of financing extended through the initiative over the past several years.

The programme forms part of the country’s broader social protection and poverty alleviation framework, under which targeted financial assistance and livelihood support are being provided to vulnerable segments of the population.

Unlike conventional social assistance, interest-free lending provides beneficiaries with access to financing without incurring interest costs, with the programme focused on supporting economic and livelihood opportunities.

The Finance Division included the lending programme among key employment and social protection developments as Pakistan entered FY2027 with improving macroeconomic conditions.

The report also showed that 39,159 Pakistani workers registered for overseas employment in July 2026, reflecting another channel through which households seek employment and income opportunities.

Separately, the Benazir Income Support Programme disbursed Rs706 billion during FY2026 as part of the government’s targeted social assistance framework.

The Finance Division said targeted social assistance remained important for protecting vulnerable households while the economy continued its recovery.

The wider economic environment improved during FY2026, with the fiscal deficit narrowing to 2.6% of GDP and large-scale manufacturing returning to positive growth. However, inflation and external economic uncertainties continue to affect household purchasing power and livelihoods.

Consumer price inflation stood at 9.2% year-on-year in July 2026, while the Finance Division projected inflation in the range of 10–11% for August.

Against this backdrop, interest-free financing provides a mechanism for extending financial support beyond direct cash assistance by giving eligible borrowers access to funds for livelihood and income-generating needs.

The 5,778 loans worth Rs413 million disbursed in July brought cumulative financing of Rs126.67 billion since 2019, highlighting the continuing role of interest-free lending in Pakistan’s poverty alleviation and social protection efforts.

Credit: INP-WealthPk