By Farooq Awan

Pakistan expanded financial support for low-income households during FY2025-26 through higher spending on social protection and continued disbursement of interest-free loans, reinforcing efforts to promote financial inclusion and reduce poverty.

According to the Finance Division's Monthly Economic Update & Outlook (June 2026), the government's inclusive growth agenda remained on track during the fiscal year, with increased allocations for social protection programmes, expanded access to interest-free financing and continued support for overseas employment.

The report states that the Pakistan Poverty Alleviation Fund (PPAF), working through 24 partner organisations, disbursed 6,935 interest-free loans worth Rs493 million during May 2026. These loans are intended to help low-income households establish or expand small businesses, improve livelihoods and enhance household incomes.

According to the report, the interest-free lending programme has expanded substantially over the past several years. Since 2019, cumulative disbursements have reached Rs125.7 billion, demonstrating the government's continued focus on improving financial access for underserved communities through Shariah-compliant financing.

The report also highlights increased spending under the Benazir Income Support Programme (BISP). During July-April FY2025-26, expenditures under the programme reached Rs518.1 billion, representing a 25.9% increase compared with the corresponding period of the previous fiscal year. According to the Finance Division, the increase reflects the government's commitment to strengthening the social safety net for vulnerable households.

The document notes that overseas employment continued to play a vital role in income generation for Pakistani workers and their families. During May 2026, the Bureau of Emigration and Overseas Employment registered 34,946 workers for employment abroad, supporting labour mobility and future remittance inflows.

According to the Finance Division, inclusive growth remains a central pillar of the government's economic strategy. Alongside macroeconomic stabilisation, programmes aimed at expanding financial inclusion, supporting vulnerable groups and promoting employment are intended to ensure that the benefits of economic recovery are shared more broadly across society.

The report states that stronger social protection and access to affordable finance can help reduce poverty, encourage entrepreneurship and improve household resilience against economic shocks. These measures complement broader reforms designed to promote sustainable and inclusive economic growth.

According to the Finance Division, continued investment in social protection, poverty alleviation and financial inclusion will remain important for strengthening human development and supporting long-term economic progress. The report concludes that expanding targeted assistance to low-income households will help reinforce inclusive growth while contributing to Pakistan's broader development objectives.

Credit: INP-WealthPk