Civil servants: Institutional restructuring, compensation packages discussed
ISLAMABAD: Under the chairmanship of Planning Minister Ahsan Iqbal, the 13th meeting of the Civil Service Reforms Committee was convened Wednesday. The meeting focused on key agenda items, including institutional restructuring and reviewing compensation packages for civil servants.
Presentations were made by the Cabinet Division on institutional restructuring, while officers from the Finance Division and Economic Affairs Division (EAD) briefed the Minister on current situation and proposed recommendations to review financial compensation. Discussions centered around modernizing recruitment criteria to cater to the evolving needs of the civil service.
The Minister emphasized the need for restructuring service in a way that allows officers to differentiate themselves based on performance rather than their initial service allocation. 'A strategy must be devised to enable top talent at senior level to compete for key positions on merit,' stated the Minister.
Regarding financial compensation, an analysis presented by EAD and Finance Division officers highlighted the challenges faced by civil servants, including inadequate medical support, transportation, and accommodation. Key findings highlighted the unavailability of affordable housing and transportation in Islamabad as major deterrents for officers. Several recommendations were discussed at length and direction was given by Minister to incorporate the most viable recommendations into summary to be presented before the PM.
The meeting participants were informed that the state bears a significant burden of Rs. 1.04 trillion annually for pension payments to two million officers. Finance Division representatives apprised the Minister that significant pension reforms have been introduced as part of the Budget 2025-26, aiming to rationalise public spending and reduce the growing fiscal burden posed by the existing pension system.
The Minister stressed that pension should not be a 'dead investment' and suggested utilizing the skills of retired officers in various organizations.
To address medical support issues, a summary prepared by the Ministry of National Health Services proposing health insurance as a viable alternative was discussed.
The Minister directed relevant officials to conduct a comparative analysis of allowances drawn by civil servants in federal and provincial governments. Recommendations were made to make it mandatory for civil servants to serve in the federal government for a specific period to be eligible for promotion.
The committee discussed various suggestions to address issues related to remuneration, accommodation, transport, and monetization. The Minister emphasized the need for administrative steps to attract officers to serve in the federal government, rather than relying solely on financial incentives.
The meeting concluded with Minister's direction to compile a final report, incorporating all recommendations and findings, for discussion in the next meeting.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
an hour ago
- Express Tribune
Iqbal highlights development priorities
Planning Minister Ahsan Iqbal on Thursday acknowledged that tight fiscal space, driven by structural constraints, has reduced its ability to fund development projects under the Public Sector Development Programme (PSDP). At a news conference, he said the development budget has declined from 2.6% of GDP in 2017-18 to just 0.8% — a trend described as a serious structural concern for national development. He said the government aims to meet development and other expenditures through domestic resources, however, achieving this goal requires raising Pakistan's tax-to-GDP ratio to at least 16% — a level already maintained by regional peers.
Business Recorder
an hour ago
- Business Recorder
Spot rate loses Rs500 per maund amid slow activity
LAHORE: The Spot Rate Committee of the Karachi Cotton Association (KCA) on Thursday decreased the spot rate by Rs 500 per maund and closed it at Rs 16,200 per maund. Cotton Analyst Naseem Usman told Business Recorder that the local cotton market remained steady and the trading volume remained low. He also told that the current cotton prices in Sindh and Punjab is in between Rs 16,500 and Rs 17,500 per maund, depending on quality and payment. 200 bales of the new crop of cotton were sold at Rs 16,100 per maund. The Spot Rate Committee of the Karachi Cotton Association decreased the spot rate by Rs 500 per maund and closed it at Rs 16,200 per maund. Polyester Fiber was available at Rs 333 per kg. Copyright Business Recorder, 2025
Business Recorder
an hour ago
- Business Recorder
Budget 2025-2026: No vision beyond fiscal survival
The federal budget for financial year 2025-26 presented on June 10, 2025, in the National Assembly, has laid bare both the ambitions and contradictions of Pakistan's fiscal strategy. The total revenue receipts, estimated at Rs 19,278,090 million, are up from Rs 16,802,123 million in the revised estimates of 2024-25, reflecting a significant increase of over Rs 2.47 trillion. Tax revenue target has been set at Rs 14,131,000 million, with direct taxes amounting to Rs 6,902,000 million and indirect taxes Rs 7,229,000 million. The share of indirect taxation remains worryingly high, pointing to the regressive nature of revenue mobilization framework. The total non-tax revenue stands at Rs 5,147,090 million, supported primarily by petroleum levy (Rs 1,468,395 million), State Bank's surplus profits (Rs 2,400,000 million), and dividends (Rs 206,134 million). Dominance of petroleum levy in non-tax receipts suggests fiscal reliance on consumer end fuel prices, with inflationary consequences for the common man. The markup receipts from provinces and public sector enterprises are estimated at Rs 283,810 million and Rs 188,000 million respectively, showing a recovery from the preceding year's underperformance. Capital receipts, including recovery of loans and domestic debt receipts, are estimated at Rs 17,274,113 million. Domestic debt receipts alone are Rs 16,671,113 million, reflecting continued borrowing to meet budgetary shortfalls. Repayment of domestic debt is projected at Rs 14,007,189 million, yielding net domestic debt receipts of Rs 2,663,924 million. Reliance on treasury bills, accounting for Rs 8,430,000 million of the floating debt, reflects the government's short-term borrowing preference with implications for interest rate volatility. The external receipts have been estimated at Rs 5,777,554 million, marginally down from the revised Rs 5,833,308 million in 2024-25. Project loans from federal and autonomous bodies total Rs 215,719 million, with programme loans and other loans amounting to Rs 4,413,510 million. The sustainability of external borrowing remains under strain given the increasing repayment obligations, as evidenced by Rs 5,472,222 million allocated to foreign loan repayments. Gross federal resources have been computed at Rs 28,532,694 million, with a deduction of Rs 8,205,723 million for the provincial share in federal taxes, resulting in net federal resources of Rs 20,326,971 million. Cash surplus expected from provinces is Rs 1,464,000 million, while privatization proceeds have been ambitiously pitched at Rs 86,550 million, a more than tenfold increase from Rs 8,000 million in the previous year. Total estimated resources thus stand at Rs 23,848,112 million, which equals the total proposed expenditure. The current expenditure on revenue has been set at Rs 16,286,045 million, which includes Rs 12,210,851 million under public services, Rs 2,557,950 million for defence services, and Rs 734,187 million for social protection. The defence budget sees an increment of Rs 368 billion, raising critical questions about prioritization amidst economic distress. The allocation for education stands at Rs 112,683 million and for health at Rs 31,975 million, barely increasing from revised estimates and falling short of international benchmarks. The current expenditure on capital accounts is estimated at Rs 5,787,114 million, a dramatic surge from Rs 3,398,098 million last year, due to ballooning foreign loan repayments. The total current expenditure sums up to Rs 22,073,159 million. The development expenditure has been reduced to Rs 1,774,953 million, with Rs. 590,774 million allocated for revenue account and Rs 1,184,179 million for capital account, suggesting fiscal consolidation at the cost of long-term growth. Total expenditure stands at Rs 23,848,112 million, with Rs 16,876,819 million on revenue account and Rs 6,971,293 million on capital account. Debt servicing constitutes domestic Rs 8,207,250 million and Rs 1,009,322 million for foreign debt, totaling Rs 9,216,572 million, representing 38.6 percent of total current expenditure. The burden of debt repayment limits fiscal flexibility and crowds out essential public services. The policy measures embedded in the Finance Bill 2025-26 under the Customs Act of 1969, Sales Tax Act of 1990, and Income Tax Ordinance of 2001 introduce a wide range of changes. Tariff rationalization initiative eliminates outdated slabs and introduces new 5 percent, 10 percent, and 15 percent slabs, reducing additional customs duty (ACD) rates and regulatory duties across thousands of PCT codes. Digitization pushing through centralized assessment units, cargo tracking systems, and customs modernization aligns with global best practices, yet its effectiveness hinges on implementation. The Sales Tax Act amendments propose taxing e-commerce through e-Bilty and cargo tracking definitions and shifting collection responsibility to banks and couriers. Expansion of the Third Schedule to include imported coffee, cereal bars, and chocolates underlines the government's attempt to formalize retail tax collection. Withdrawal of exemptions on solar panels and industrial units in the erstwhile FATA/PATA marks a move toward harmonized taxation but may generate backlash from impacted sectors. The income tax measures include a new digital transaction proceeds levy, increase in tax on dividends to 25 percent, and enhancement of tax on debt income from 15 percent to 20 percent. Tax burden on non-filers and pensioners earning above Rs 10 million has also increased. Relief measures offer marginal reduction in salaried class tax rates and extend exemptions to the erstwhile FATA/PATA. The procedural tightening on cash transactions and property valuations aims to expand the formal economy. The fiscal framework for 2025-26 reveals a strategy focused on aggressive revenue mobilization, enhanced digitization, and expenditure rationalization. The projected revenue receipts of Rs 19.28 trillion against an expenditure of Rs 23.84 trillion still leave a fiscal deficit, to be bridged by Rs 5.78 trillion in external receipts and Rs 2.66 trillion in net domestic borrowing. The macroeconomic implications of such debt-driven budgeting include inflationary pressures, exchange rate vulnerabilities, and heightened interest obligations. The common citizen faces a dual burden. Increase in petroleum levy, withholding taxes, and indirect taxes will translate into higher prices of essentials. The limited allocation for health, education, and social welfare undermines human development prospects. The disparity between current and development spending, with the former constituting over 92% of total expenditure, reveals a short-term orientation at the cost of long-term growth. The government must revisit its budgetary priorities. The tax policy should shift from indirect to direct taxation to promote equity. The expenditure side must see rationalization of defence and administrative costs, while enhancing allocations to education, health, and job creation. The privatization target of Rs. 86.5 billion must be accompanied by transparency and accountability. The success of digital enforcement, customs reform, and tax policy overhaul will depend on institutional capacity, governance, and political will. The federal budget 2025-26 represents both a fiscal necessity and a political choice. The numbers reflect economic urgency, but the distribution reflects entrenched priorities. The path forward demands more than arithmetic; it requires structural reform, inclusive planning, and a vision beyond fiscal survival. (Huzaima Bukhari & Dr Ikramul Haq, lawyers and partners of Huzaima & Ikram, are Adjunct Faculty at Lahore University of Management Sciences (LUMS), members Advisory Board and Visiting Senior Fellows of Pakistan Institute of Development Economics (PIDE) and Abdul Rauf Shakoori is a corporate lawyer) Copyright Business Recorder, 2025
