Business

Govt plans austerity measures by slashing Rs1.9tr expenditures

Published

1 year ago

Farwa

Govt decides reducing operational spending on devolved ministries.
Recommends ban on new posts, hiring daily wages/other staff, etc.
Considers implementing cost-sharing mechanism of BISP with provinces.

ISLAMABAD: The caretaker government is planning to take austerity measures by cutting down expenditures by Rs1.9 trillion including banning new posts, purchasing security vehicles, and slashing down allocation for development, The News reported Friday.

The government has also considered making a treasury single account (TSA) and asking the federal ministries and attached departments to shift the money into the federal government account to save up to Rs424 billion.

It has been calculated that 10% of the expenditures incurred on running the federal government in FY22 could save Rs54 billion as worked out by the World Bank.

The government has also decided to reduce the operational spending on devolved ministries to save up to Rs328 billion for the whole financial year 2023-24.

In the aftermath of the 18th Amendment, different subjects were transferred to the provinces but the centre continued spending, causing losses to the national exchequer.

A detailed working of the government considered by the high-profile Cabinet Committee on Economic Revival (CCER) so far proposed certain austerity measures to cut down the expenditures by up to Rs1.9 trillion on a short-term basis.

However, it is yet to be seen if these measures will be implemented in letter and spirit.

It recommended that the federal and provincial governments both take austerity measures to reduce the expenditures by Rs54 billion for six months such as slapping a ban on new posts, hiring of daily wages/other staff, ban on purchasing new vehicles including from project funding, ban on purchase of machinery and equipment except medical, ban on travel abroad including official visits, medical treatment, cabinet members to forego pay and government vehicles and security vehicles to be withdrawn.

The ambitious plan also envisages that the triage of 14 loss-making entities will potentially save Rs458 billion for the whole financial year. The reduced operational spending on devolved ministries is going to save up to Rs328 billion during the current financial year.

The Ministry of Finance has estimated that the devolution of the Higher Education Commission (HEC) to the provinces would save Rs70 billion per annum. Education had become a provincial subject in the aftermath of the 18th Amendment but the Center recontinued with the HEC at the federal level.

The caretaker regime has placed it as an agenda to devolve the HEC to the provinces so it is yet to see how much they are going to succeed on this front.

Moreover, it is also considering implementing the cost-sharing mechanism of the Benazir Income Support Programme (BISP) with the provinces to save Rs217 billion on an annual basis.

The federal government is also considering re-focusing the Public Sector Development Program (PSDP) spending only on federally mandated projects which could save Rs315 billion annually.

Caretaker Minister for Finance Dr Shamshad Akhtar had already directed the minister for planning to work out details of projects of a provincial nature for their removal from the list of PSDP to cut down the expenditures by Rs315 billion for the current fiscal year.

The last Pakistan Democratic Movement (PDM)-led regime had allocated Rs950 billion for the PSDP in budget 2023-24.

Business

In FY 2024, the federal government gives institutions Rs 437 billion.

Published

8 hours ago

Farwa

The Ministry of Finance revealed that a total of Rs 437 billion was given as support to different government agencies in Pakistan during the first half of fiscal year 2024.

Of this, Rs232 billion was set aside for subsidies to Pakistani public sector organizations. Furthermore, subsidies totaling Rs 120 billion were given to Pakistani government organizations between July and December 2023.

During the first half of the previous fiscal year, Pakistani government institutions received loans totaling Rs 85 billion. Sui Southern Gas Company in Pakistan was one of the main beneficiaries of the subsidies.

Other well-known Pakistani organizations that benefited from subsidies are Hyderabad Electric Supply Company (HESCO), which received Rs 18.34 billion, and Lahore Electric Supply Company (LESCO), which received Rs 26.24 billion. Subsidies totaling Rs11.63 billion went to the Utility Stores Corporation of Pakistan.

In addition, Power Holding received a grant of Rs88.52 billion in the first half of fiscal year 2024, followed by Pakistan Railways with Rs27.5 billion and the National Highway Authority (NHA) with Rs4 billion.

Apart from subsidies, the Pakistani federal government also gave loans, giving NHA approximately Rs 25 billion and Pakistan Steel Mills Rs 35.54 billion.

The National Transmission & Despatch Company (NTDC) received Rs6.1 billion, Printing Corporation received Rs1.2 billion, JENCO-II received Rs16.53 billion, and Radio Pakistan received Rs210 million. MEPCO, PESCO, and LESCO also received loans during this period. receiving Rs47 billion, while MEPCO (Multan Electric Power Company) received Rs42.56 billion.

A report released on December 27 by the Pakistan Bureau of Statistics states that over the past year, the cost of some goods in Pakistan has significantly increased while the cost of others has decreased.

The research claims that the price of tomatoes has increased significantly, rising by 138.53 percent (pc). Women’s sandal prices increased by 75.09 percent, while the cost of potatoes increased by 61.17 percent. Lentils, too, experienced a price surge, with chana dal increasing by 51.17 pc and mung dal by 31.51 pc.

Prices for beef increased by 24.28 percent, while those for powdered milk increased by 25.62 percent. Garlic became 17.27 pc more expensive, and cooked lentils went up by 15.10 pc. Gas charges in Pakistan have also risen by 15.52 pc, and firewood prices climbed by 13.14 pc.

Business

With its second-largest surge ever, PSX approaches 114,000 points.

Published

6 days ago

Farwa

Driven by renewed activity from both private and government financial institutions, the Pakistan Stock Exchange (PSX) saw its second-largest rally in history on Monday.

The market regained many important levels in a single trading session as it rose with previously unheard-of momentum.

Intraday trading saw a top increase of 4,676 points, and the PSX’s benchmark KSE-100 Index gained 4,411 points to settle at 113,924 points. This impressive rebound demonstrated significant investor confidence by reestablishing the 100,000, 111,000, 112,000, and 113,000-point levels.

The market also saw the 114,000-point limit reestablished during the trading session.

The positive tendency was reflected when the market’s heavyweight shares touched its upper circuits. Among the most busiest trading sessions in recent memory, an astounding 85.78 billion shares worth a total of Rs55 billion were exchanged.

Experts credited the spike to heightened institutional investor activity and hope for macroeconomic recovery. Considered a major market recovery, the rally demonstrated the market’s tenacity and development potential.

Business

In interbank trade, the Pakistani rupee beats the US dollar.

Published

2 weeks ago

Farwa

In the international exchange market, the US dollar has continued to weaken in relation to the Pakistani rupee.

The dollar fell to Rs278.10 from Rs278.17 at the beginning of interbank trading, according to currency dealers, a seven paisa loss.

In the meantime, there was a lot of turbulence in the stock market, but it recovered and moved into the positive zone. The KSE-100 index recovered momentum and reached 116,000 points after soaring 1,300 points.

Both currency and stock market swings, according to analysts, are a reflection of ongoing market adjustments and economic uncertainty.