In Islamabad, the caretaker government is planning significant austeritymeasures, aiming to reduce expenses by Rs1.9 trillion. These measuresinclude prohibiting the creation of new positions, acquiring securityvehicles, and cutting allocations for development.
Additionally, the government is exploring the implementation of a treasurysingle account (TSA) and encouraging federal ministries and attacheddepartments to transfer funds to the federal government account,potentially saving up to Rs424 billion.
The government has identified that adopting austerity measures equivalentto 10% of the expenses incurred in running the federal government duringFY22 could result in savings of Rs54 billion, as suggested by the WorldBank.
To further economize, the government plans to reduce operational spendingon devolved ministries, potentially saving Rs328 billion for the entirefiscal year 2023-24. In the aftermath of the 18th Amendment, certainresponsibilities were transferred to the provinces, but central governmentspending continued, causing losses to the national treasury.
A high-profile Cabinet Committee on Economic Revival (CCER) has proposedthese austerity measures to reduce expenses by up to Rs1.9 trillion in theshort term. However, the implementation of these measures remains to beseen.
The recommended austerity measures include a ban on new positions, hiringof daily wage and other staff, prohibiting the purchase of new vehicles(except medical), restricting the purchase of machinery and equipment(except medical), banning foreign travel (including official visits andmedical treatment), and cabinet members foregoing pay, with the withdrawalof government and security vehicles.
The plan also envisions potentially saving Rs458 billion for the fiscalyear through the restructuring of 14 loss-making entities. Furthermore, theMinistry of Finance estimates that devolving the Higher EducationCommission (HEC) to the provinces could save Rs70 billion annually.
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While education became a provincial subject after the 18th Amendment, theHEC continued to operate at the federal level. The caretaker governmentaims to devolve the HEC to the provinces, but success on this front remainsuncertain.
They are also considering implementing a cost-sharing mechanism for theBenazir Income Support Programme (BISP) with the provinces, potentiallysaving Rs217 billion annually. Additionally, the federal government iscontemplating refocusing Public Sector Development Program (PSDP) spendingexclusively on federally mandated projects, potentially saving Rs315billion annually.
Caretaker Minister for Finance Dr. Shamshad Akhtar has directed theMinister for Planning to work out the details of provincial projects toremove them from the PSDP list, aiming to reduce expenditures by Rs315billion in the current fiscal year.
The previous Pakistan Democratic Movement (PDM)-led regime had allocatedRs950 billion for the PSDP in the 2023-24 budget.
