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Cabinet committee develops plan to trim Rs1.4 trillion expenditures

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1 year ago

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  • CCER to ask govts to reduce officer-to-staff ratio to 1:3 in gradual manner.
  • It is unclear how much time frame has been calculated to implement reforms.
  • Govt has decided to focus on feasible public private partnership projects.

ISLAMABAD: The Cabinet Committee on Economic Revival (CCER) has sought a roadmap that includes a detailed plan for the freezing of salaries, pensions and allowances as well as reducing officer-to-staff ratios as it looks to cut down expenditures by Rs1.4 trillion, reported The News on Monday.

According to the publication, the Anwaar-ul-Haq Kakar-led caretaker government has finalised a number of recommendations under an ambitious austerity plan. The CCER is expected to ask the federal and provincial governments to reduce the officer-to-staff ratio to 1:3 in a gradual manner.

However, it is unclear how much time frame the CCER will be giving to the federal and provincial governments for the implementation of the plan.

“The caretaker government has sought plans to freeze salaries, allowances, and pensions during the current financial year,” showed the CCER deliberations.

The publication reported that the government seeks to review untargeted subsidies and grants to cut down expenditures.

There are accumulated bills of subsidies amounting to Rs1.064 trillion sought in the last budget for the current fiscal year. Out of this, the power sector subsidies are going to consume a major chunk to the tune of Rs0.97 trillion. The government has sought funding of Rs1.4 trillion in the shape of grants to different institutions and departments in the budget, so all this massive funding needs to be reviewed in detail.

The committee has also suggested that the federal government let go of unnecessary or untargeted dole-outs. 

Furthermore, it has been recommended that the Public Sector Development Program (PSDP) at the federal level and Annual Development Plans (ADPs) at the provincial level be curtailed by putting an end to new schemes and transferring all provincial nature schemes to the federating units.

In the work done by the Ministry of Finance, it has been estimated that the re-focusing of PSDP schemes on account of the federal mandate could save Rs315 billion for the federal government for the current fiscal year.

The caretaker government also plans to phase out federal expenditure on devolved subjects. The reduction in operational spending on account of devolved ministries could save Rs328 billion.

However, it is unclear if the caretaker government will be able to abolish all the politically motivated or provincial nature development projects from the PSDP before handing the reins of government.

The government has decided to focus on feasible public-private partnership (PPP) projects. It is estimated at the federal level, 50% of the PSDP portfolio would be shifted to the Public Private Partnership (PPP) Authority, known as the P3A pipeline.

It seeks credit guarantees from Infrazamin, an innovative for-profit credit enhancement facility, to enhance private sector investment in infrastructure, enhance allocation to the Viability Gap Fund (VGF) for undertaking infrastructure projects in PPP mode, climate-resilient infrastructure through green bonds and debt swaps, and Sustainable Finance Bureau to assist corporates and public organisations to tap Environment Sustainability Gap (ESG) funds.

The government wants to stick to the condition of the IMF under which no supplementary grants will be allowed for the current fiscal year. 

Under the $3 billion standby arrangement (SBA) programme of the IMF, the Fund has slapped a ban on supplementary grants during the programme period. So it will continue to persist in the current fiscal year.

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Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

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2 days ago

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The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

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The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

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2 days ago

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The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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3 days ago

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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