Govt Austerity Measures Expected to Save Rs16.8 Billion

ISLAMABAD: Federal Finance Secretary Imdadullah Bosal has said the government’s new austerity measures are expected to save a total of Rs16.8 billion, while a 50 percent reduction in fuel allocations for government vehicles will save only around Rs700 million over three months.

Briefing the National Assembly’s Standing Committee on Finance, chaired by Syed Naveed Qamar, on the progress of the International Monetary Fund (IMF) programme, Bosal said a five percent reduction in non-salary expenditure over one year would generate savings of approximately Rs16.1 billion.

During the meeting, Pakistan Peoples Party lawmaker Hina Rabbani Khar questioned whether the government’s austerity campaign was merely symbolic. The finance secretary did not directly respond to the question.

Bosal, who is also the government’s chief negotiator with the IMF, said overall implementation of the IMF programme had been relatively strong. However, he acknowledged that the government had failed to meet some programme conditions within the stipulated timeframe.

Sugar Sector Reforms

The finance secretary said three provinces had agreed to liberalise the sugar sector, while discussions were continuing with another province over its concerns.

Under the IMF programme, the federal and provincial governments were required to agree on a national policy for liberalising the sugar market, with approval by the federal cabinet required by June. The proposed reforms include changes relating to licensing, price controls, import and export permissions, and zoning.

However, the government failed to approve the policy within the prescribed deadline.

Agricultural Income Tax

The committee was also informed that progress on the IMF condition concerning the collection of agricultural income tax had been slow. The IMF also held a meeting with the Sindh government on the issue.

Qamar questioned the effectiveness of the agricultural income tax measures, arguing that increasing the tax rate on agricultural income from 15 percent to 45 percent would not necessarily ensure greater compliance.

Health and Education Targets

Bosal also acknowledged that targets related to health and education spending had not been achieved because some provinces did not make the required expenditures.

In addition, the government has yet to fulfil a condition requiring the laws governing nine more state-owned entities to be brought into line with the State-Owned Enterprises Act.

Anti-Corruption Measures

Regarding the IMF’s anti-corruption requirement, Bosal said Prime Minister Shehbaz Sharif had assigned the Federal Minister for Law and Justice and the National Accountability Bureau (NAB) to prepare action plans aimed at reducing corruption risks in 10 government departments identified as having the highest risks.

The briefing highlighted both the progress made under Pakistan’s IMF programme and several areas where the government and provinces have yet to meet agreed targets.