Pakistan: Belt-tightening ordered to avert economic storm

INTERNATIONAL DESK: Pakistan Prime Minister Shehbaz Sharif has asked his ministers and advisers to forego their salaries, benefits and luxury cars and fly economy class as part of an austerity drive aimed at saving the government Rs200 billion a year.

The belt-tightening comes as the government is trying to resume a stalled loan programme of the International Monetary Fund (IMF) to secure funds worth $1 billion. The premier said an agreement with the Fund was in its final stages.

The expenditure cuts are part of an effort to stave off an economic meltdown as the country is facing a balance-of-payments crisis, State Bank’s foreign exchange reserves have fallen below a three-week import cover, and inflation remains consistently high.

“Far-reaching results of these (austerity) measures will come to the fore. We will save around over Rs200 billion due to such measures,” the prime minister told reporters after a cabinet meeting on Wednesday.

Flanked by nine federal ministers, the premier said that although these measures would not give any significant relief to already inflation-hit people, they would give them a sense that the government realised their pain and agony.

He said these measures would be implemented immediately, adding that “additional steps” would be taken at the time of the budget for the new fiscal year.

Some of the decisions taken in the federal cabinet meeting included the withdrawal of salaries, security vehicles, perks and privileges of cabinet members; a ban on the import of luxury items and official vehicles for over a year; fewer foreign visits; a ban for cabinet members on staying in five-star hotels; only one official plot for a government employee; selling spacious houses given to government officers; the opening of government offices at 7:30am to save electricity and gas, etc.

The prime minister also announced a 15 per cut in expenses of government institutions and a reduction in non-combat expenditure of armed forces, which will formally be announced by them soon.

He said the meeting also decided that no administrative unit, tehsil, district, division and province would be carved out anywhere in the country for the next two years. “The federal cabinet and I request the chief justice of Pakistan, the chief justices [of high courts] and courts of all four provinces, and the chief ministers to implement similar measures in their institutions and governments,” Mr Sharif said.

Besides, armed forces had also given a positive response to cut non-combat expenditures, Mr Sharif said without elaborating.

Mr Sharif also said the government would soon cut the size of the federal cabinet, which is said to be one of the biggest in the country’s history with 85 members, including 34 federal ministers, seven ministers of state, and four advisers and 40 special assistants to the prime minister.

In earlier cabinet meetings, the prime minister had announced austerity measures more than two times, but they could not be implemented.

One major power-saving decision was that shops and markets would be closed at 8pm. However, an official told Dawn the government could not implement that decision in the face of pressure from the business community.

However, from now on, “we will give the message in the Centre and the provinces that if there is further delay in its implementation, we will be forced to cut the power supply of big markets and malls”, the official said.

The prime minister said the cabinet in its Wednesday meeting had decided that all federal cabinet members, advisers and special assistants would not draw salaries and other privileges.

“Now all members of the cabinet would pay the utility bills from their own resources and would return all the luxury vehicles, which would be auctioned,” he said, adding that cabinet members would use economy class during their domestic and foreign visits while their assisting staff would not be allowed to accompany them.

However, in announcing the withdrawal of salaries, security and perks and privileges of cabinet members, the prime minister contradicted his own previous claim that most members were serving on a pro-bono basis.

On a question about a series of visits by Foreign Minister Bilawal Bhutto-Zardari, Mr Sharif said the minister bore the expenses of his foreign trips by himself.

The prime minister said senior officers in the federal government who had been utilising official vehicles besides availing the monetisation scheme would be required to return all such vehicles. “This practice is being immediately banned and anyone found violating the ban would be proceeded against,” he added.

Official cars being used by senior ministry officials, who were already availing the car monetisation service, would be recalled, he said.

The prime minister said that extra security vehicles for the cabinet members would be withdrawn and a committee headed by the interior minister would decide the matter in case of threats.

“Until June 2024, which means till the next year, there will be a complete ban on buying luxury items. Until June 2024, there will be a complete ban on purchasing all types of new cars,” he said.

Security cars would no longer be provided to government officers, he said. “A committee, under the supervision of the interior minister, will decide on giving permission for providing security cars on a case-to-case basis depending on the gravity of the situation.”

He asserted that no cabinet member or government officer would use a luxury car. In addition, teleconferencing would be promoted to reduce travelling expenses, he said.

The prime minister said a “single treasury account” would be established, adding that the finance ministry had started working in this regard.

He noted that there were British-era government houses spread over several acres, where police officers and ministers were residing while hundreds of thousands of citizens had to sleep under the open sky. “A committee headed by the law minister has been formed to draft a plan for building townhouses on this land,” he said.

The prime minister said that in terms of food, only a single dish would be allowed at government events. “There will only be one dish in all the ministries in Islamabad, the Prime Minister’s House and the federal cabinet. If it’s teatime, only tea and biscuits will be provided,” he added.

However, this restriction would not apply to foreign guests and dignitaries, he said, adding, “But even then, we will exercise caution … It will not be lavish. We will do it in a simple manner.”

Answering a query regarding the government’s deal with the IMF, Mr Sharif said it was in the final stages and hoped that everything would go well. He said that Pakistan had fulfilled almost all conditions set by the Fund.

He said “matters [with the IMF] would be settled in a few days” but warned that it would lead to further inflation.

Meanwhile, the Senate Standing Committee on Defence is meeting on Thursday (today) in the parliament with Senator Mushahid Hussain Syed in the chair to get a briefing from the armed forces on how they will cut their non-combat expenditure.

“Given the nature of the severe economic crisis facing Pakistan, updates/briefing on efforts by the armed forces (all three services) to promote austerity/cost-cutting in unnecessary expenditure, especially saving in the foreign exchange,” the agenda of the meeting said. (Dawn)