Govt to wind up idle depts in budget
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Days before the presentation of the federal budget, Prime Minister Shehbaz Sharif has instructed ministries to identify redundant government organisations that can be wound up in the budget to save money and to also sort out the issue of power sector subsidies.
Government sources told The Express Tribune that after taking a briefing on the new budget, the prime minister constituted about half-a-dozen committees to address major pending issues. The committees have been constituted 10 days before the presentation of the budget in the National Assembly.
Finance Minister Muhammad Aurangzeb is scheduled to present the budget on June 2 in the National Assembly. The prime minister asked him to sort out all pending issues by Saturday.
The sources said that the ongoing discussions with the International Monetary Fund are expected to conclude today with the most crucial meeting between the IMF, the Federal Board of Revenue and the finance ministry. They said that the FBR remained the thorny issue in the talks and a couple of meetings were also tense in which the IMF staff questioned the credibility of the commitments given by the FBR at the time of the staff level discussions in March.
The sources said that after the briefing on the budget, the prime minister decided to constitute the committees to resolve the pending issues. He set the deadlines till May 24 for the ministries aimed at concluding the budget exercise in time.
The sources said that the prime minister has instructed all the ministries to review the pink book to identify redundant and dysfunctional organizations and recommended winding up as part of the government's downsizing and cost-cutting agenda. The deadline is May 24th.
The prime minister had constituted a cabinet committee on reducing the size of the government, which undertook the exercise in five different phases. However, the results remained below the government's own expectations.
The federal rightsizing committee is now expected to complete the review of the purpose and rationale of various state-owned enterprises, which will be completed by end-December 2025.
In a briefing to the Senate Standing Committee on Finance last month, the Cabinet Division stated that the drive to reduce government expenditures by abolishing posts would save Rs36 billion annually. It further informed that one-fifth of the savings were ensured by cutting the lowest pay grade-1 posts of gardeners, sweepers and peons.
About 40,000 positions have already been either abolished or declared dying positions in the public sector. Out of these 11,558 positions that were either abolished or declared dying belonged to Pakistan's lowest pay scale 1. This is equal to 29% of the total positions that are being abolished. The average salary of pay scale one is Rs42,888 and peons, gardeners and sweepers are recruited in this scale.
The committee was informed that abolishing all these nearly 40,000 positions would save annually Rs36.3 billion. But 19% or Rs7 billion savings were against the lowest pay scale 1.
The PM also instructed the Finance Minister to submit contours of key budget initiatives and priorities that will form the narrative component of the Budget Speech. The instructions have also been issued to the media publicity wing of the government and the ministry to ensure favourable narrative, the sources added.
In an important development, the PM also instructed the Planning Minister and the Finance Minister to hold consultative meetings with relevant ministries to deliberate on proposed plans, projects, and initiatives for the fiscal year 202526.
The committee has been tasked to finish the job by today (Friday) and ensure that only those projects are added in the Public Sector Development Programme that can be fully funded in the midst of scarcity of the resources.
The sources said that the Deputy Prime Minister Ishaq Dar is expected to chair a meeting today (Friday) to finalize the next year's PSDP. The development budget size remains uncertain, as the Planning Ministry and the coalition partners have termed the Rs921 billion proposed size insufficient.
The sources said that the PM asked the concerned party that the agreed-upon proposals, along with a summary of key initiatives from all important ministries, should be submitted for his consideration.
The sources said that one of the outstanding issues is how much money should be allocated for discretionary spending under the parliamentarians programme. The original allocation for this fiscal year was roughly Rs50 billion but the chances are the spending will be higher than this, contrary to cuts against other ministries.
For the next fiscal year, the government is facing pressure to allocate a larger pie for these schemes, known as SDGs Achievement Programme.
Ishaq Dar on Thursday chaired the 45th meeting of the Steering Committee on SDGs Achievement Programme (SAP). Dar stressed the importance of involving local communities in identifying basic development infrastructure projects. He emphasized the Government's resolve to ensure that resources are utilized in the best interest of Pakistan's citizens, aligning them with the Sustainable Development Goals (SDGs).
It was decided that unallocated funds will be surrendered while the implementing agencies were directed to utilize the allocated funds efficiently and responsibly. However, the unspent money is hardly Rs2 billion, said the sources.
The PM has also asked the Finance and Power ministries to sort out the issue of the quantum of power subsidies. A meeting between both the ministries took place on Thursday but the issue remained unresolved, said a senior ministry official.
The government has allocated Rs1.04 trillion for power subsidies for the next fiscal year, which is equal to 0.8% of the GDP. The sources said that the Power Division was asking for roughly Rs180 billion more on account of share from the petroleum levy. Shehbaz Sharif had increased the levy rate by Rs10 per liter to reduce the cost of electricity by Rs1.71 per unit.
The PM instructed that the Power Division and Finance Division should further fine-tune the proposal regarding allocation of Petroleum Development Levy (PDL) for providing tariff subsidies, said the sources.
The PM asked the Petroleum Division to take lead and sort out the issue of input tax adjustments of the refineries. The Petroleum Division has been asked to sort out the issue in consultation with the Finance Division and Revenue Division by Saturday.
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