Kamyab Pakistan Programme: Govt shelves plans for doling out over Rs3.7 trillion

ISLAMABAD: The government has shelved its initially-envisaged plans for doling out over Rs3.7 trillion in the shape of small loans for reaching out to seven million families over the next five years under the much-hyped Kamyab Pakistan Program (KPP).

However, this whole programme under the KPP has been revised downward to align with the IMF conditions because the Washington-based multilateral institution asked Islamabad to keep guarantees on loans at subsidised rates within the stipulated limits.

One independent economist, on condition of anonymity, said that such a politically-motivated program, if implemented, would result in pushing up demand for higher inflation because many people would have more money, so they would go for buying more produced products. The economic policies, he said, need to be devised and run in tandem, otherwise more serious challenges would start hovering around the economic horizon of the country.

According to initially-envisaged plans with salient features of KPP, the government wanted to reach out to seven million families for providing over Rs3.7 trillion small loans for three major categories of small borrowers.

Under the category-I, the government sought launching of the Kamyab Jawan Program (KJP) for providing loans of Rs1.2 trillion to 3,500,000 borrowers. For the Kamyab Kissan Program, the government had envisaged to provide Rs700 billion loans among 2,400,000 new borrowers. It intended to launch a Low-Cost Housing Program for providing Rs1,800 billion among 1,200,000 new borrowers. Now, this program is going to be launched in the coming weeks but the government scaled down it massively to bring it in line with the IMF conditions.

The Kamyab Pakistan Program had envisaged an ambitious target of extension of subsidized new micro loans of more than Rs3,700 billion reaching seven million families in the next five years; it was also argued that the KPP shall presumably be one of the largest programs of its nature in the world.

Cash injection into the economy at such a scale and to the lowest income strata shall have an immensely positive impact on the country’s economic condition. This program has been envisaged for achieving larger five goals including generating employment opportunities, generating economic activities, achieving poverty alleviation, promoting GDP growth and ensuring financial inclusion for unbankable population.

To achieve the desired results with scale from Prime Minister's Kamyab Jawan-Youth Entrepreneurship Scheme (PMKJ-YES) and Government’s Mark-up Subsidized Scheme (GMSS) for Low Cost Housing (LCH), building on the work done so far and to address the challenges being faced by the country’s banking sector for increasing outreach, the KPP proposes to additionally engage Micro Finance Providers (MFPs) & Housing Finance Companies (HFCs) through provision of cheaper liquidity for large scale distribution of subsidized micro loans to small enterprises, start-ups, farmers, and individuals for housing needs. The list of qualifying Executing Agencies (EAs) for this program will be issued by the SBP and SECP for the entities under their respective regulatory jurisdictions ahead of the launch of the Program.

With the launch of KPP, the microfinance industry will be brought under the ambit of PMKJ-YES and GMSS/NPLCH via SBP with banking sector being able to extend requisite funding against the GOP guarantee. The mark-up subsidies to both the WLs and EAs will come from the government to disburse interest-free/ subsidized loans directly to the end-users.