Cut in govt employees’ salaries among austerity proposals

Different proposals, including slashing the salaries of government employees, are under consideration as a recently-formed committee is working on suggesting austerity measures for reducing the expenditure, sources say.

Besides a 10 percent cut in salaries, the 15-member panel is also considering cutting down expenditures of ministries/divisions by 15 percent and reducing the number of federal ministers, ministers of state, and advisers from 78 to 30 with the remaining working on a pro bono basis.

The recommendations would be finalised Wednesday after which the committee is going to send a report to Prime Minister Shehbaz Sharif.

It is the release of the International Monetary Fund (IMF) tranche which made the government to work on austerity but it is still is reluctant to implement the conditionalities that may produce more inflation.

Meanwhile, the committee is also recommending an end to utilising funds for provincial-nature projects and imposing a ban on public sector enterprises to secure loans through government guarantees.

However, it is reluctant to take up big ticket items for major expenditure cuts on budgetary resources such as reducing the number of ministries/divisions after the 18th Amendment which are the cause of overlapping.

It remains to be seen how the NAC will deal with losses of giant public sector enterprises such as Pakistan International Airlines (PIA) whose losses this year had gone up to Rs67 billion, whereas Pakistan Steel Mills, PASSCO, power distribution companies and others were also facing massive losses. The power sector alone saw losses of Rs1,600 billion in the last financial year.

The austerity committee also considered a proposal to freeze discretionary funds of intelligence agencies, including Inter-Services Intelligence (ISI) and Intelligence Bureau (IB).

It considered a proposal to reduce defence expenditures but the secretary of defence replied that it might not be possible in the wake of higher inflation and depreciation in exchange rates. However, the committee might consider rationalising non-combat expenditures.

The committee also deliberated upon slapping a ban on buying vehicles, freezing all perks and privileges locally and abroad and reducing the number of redundant posts in different ministries and divisions.

The World Bank had recommended abandoning PASSCO as there should be direct linkages between farmers and millers and such kind of inter-mediatory organisation should be abolished. The PASSCO’s has accumulated Rs900 billion loan and it’s piling up another kind of circular debt, which the government will have to clear by end of the day.

According to an official, the committee is preparing major recommendations but it would be hard for the incumbent government to implement any of those.

It will remain just a debating club and the government will implement only window-dressing actions instead of moving towards taking any major decision at the twilight of its tenure when the political temperature is increasing with every passing day.

The premier had constituted the NAC under the chairmanship of former bureaucrat Nasir Mahmood Khosa last week.

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