"Government Cabinet Panel Recommends Rs1.4 Trillion Expenditure Reduction"

"In an effort to reduce expenditures by Rs1.4 trillion, the Cabinet Committee on Economic Revival (CCER) is pushing for a comprehensive plan, which includes freezing salaries, pensions, allowances, and reducing officer-to-staff ratios.

 "Government Cabinet Panel Recommends Rs1.4 Trillion Expenditure Reduction"

The interim government has formulated several proposals as part of an ambitious austerity initiative. Under these measures, the CCER will urge both federal and provincial governments to gradually bring the officer-to-staff ratio down to 1:3. However, the timeline for implementing this ambitious plan remains unspecified.

The CCER has suggested freezing salaries, allowances, and pensions for the current fiscal year. The government is also planning to review indiscriminate subsidies and grants to curtail expenses. Subsidy bills from the previous budget amount to Rs1.064 trillion for the ongoing fiscal year, with a significant portion allocated to the power sector, totaling Rs0.97 trillion. Additionally, the government seeks Rs1.4 trillion in grants for various institutions and departments, necessitating a thorough review to identify and eliminate unnecessary or untargeted subsidies.

The government is proposing a reduction in the Public Sector Development Program (PSDP) at the federal level and Annual Development Plans (ADPs) at the provincial level. This involves halting new projects and transferring provincial initiatives to the respective federating units. According to the Ministry of Finance, reallocating PSDP schemes in line with federal priorities could save Rs315 billion for the federal government this fiscal year. The caretaker government also intends to phase out federal spending on devolved subjects, which could save an additional Rs328 billion.

The government's commitment to removing politically motivated or provincial projects from the PSDP list before the end of its tenure remains to be seen. Furthermore, the government plans to prioritize viable public-private partnership (PPP) projects, with around 50% of the federal PSDP portfolio shifting to the Public Private Partnership Authority (P3A pipeline).

To boost private sector investment in infrastructure, the government is seeking credit guarantees from Infrazamin, a for-profit credit enhancement facility. It also aims to enhance the Viability Gap Fund (VGF) allocation for PPP infrastructure projects, promote climate-resilient infrastructure through green bonds and debt swaps, and establish a Sustainable Finance Bureau to help corporations and public organizations access Environment Sustainability Gap (ESG) funds.

The government intends to adhere to IMF conditions, including the prohibition of supplementary grants during the current fiscal year, in accordance with the $3 billion standby arrangement (SBA) program."