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ISLAMABAD (December 08 2009): The Federal Cabinet, scheduled to meet on Tuesday with Prime Minister Syed Yousuf Raza Gilani in the chair, is expected to approve the much postponed "austerity plan" that proposes drastic curtailment in perks and privileges of the President, Prime Minister, governors, chief ministers, ministers and the top bureaucracy, according to the official documents made available to Business Recorder on Monday.
A five-day working week to save scarce resources, especially energy, and improved efficiency are two basic components of the plan. In addition, the Finance Ministry has also proposed a reduction in defence expenditure and in the number of ministers and advisors, recovery of written-off loans, displayable income tax token for small shops and tax on the income of rich landlords.
The two major expenditure items, straining the economy, are debt-servicing and non-development expenditure. "Systematically and gradually reducing defence expenditure and ensuring productive utilisation of resources", were cited by the sources as suggestions by the Finance Ministry for the austerity plan.
Officials expect that the chief ministers of the four provinces, Azad and Jammu and Kashmir (AJK) Prime Minister and representatives of Northern Areas will also participate in the meeting. The documents disclose that Prime Minister Gilani has constituted a committee under the chairmanship of the Finance Minister to make recommendations regarding austerity measures which could be adopted by the Federal, provincial, AJK and Northern Areas governments.
The Finance Ministry also sought feedback on the issue from the business community through Business Persons Council (BPC). The austerity plan was part of the Cabinet's agenda of November 4, 2009 meeting, but it was deferred reportedly because of paucity of time.
"Restructuring of public sector enterprises (PSEs), rationalisation of government size, review of current and Federal legislative lists, budgetary measures, substantial curtailment of foreign visits, use of commercial flights instead of chartered flights, expenses on public offices, two weekly holidays, security and energy efficiency and conservation are the main proposals of the austerity plan," the documents said.
These austerity measures, including input from Gallup Survey Pakistan and feedback from the Business Persons Council (BPC), were discussed by the committee in its meeting on August 18. A final committee meeting was held on November 3 prior to submission of the recommendations to the Cabinet.
The Finance Ministry's reforms unit recommended a number of austerity measures for economic stabilisation, which are parts of the austerity plan. The Ministry argued that inflation should be controlled to encourage savings, as this would create domestic funds for financing government expenditures. It has been suggested that funds, saved through austerity, should be spent on development of the energy sector.
Other recommendations include the linkage of development programmes with result-oriented performance and the scope and modus operandi of the Special Development Program (SDP) to be reformed so that leakages could be plugged. Proper evaluation of donor-funded projects, particularly the projects financed through foreign borrowing, simplicity from the top downwards, and one dish be made compulsory for all types of functions without any exception in public and/or private sector.
The Finance Ministry has recommended that review of the government project planning and completion should be undertaken to prevent wastage, besides involvement of private sector in the development projects as this would ensure relevance, monitoring and oversight. Culture of excessive dependency on imports may be discouraged and ban on non-essentials must be imposed.
About industrial sector development, the Finance Ministry suggested that new explorations in minerals, POL, gas, etc must be encouraged and ownership and construction of houses for more than 800 square yards plot be banned. The Finance Ministry cautioned that shortage of water could be a major threat to agriculture sector in future.
The ministry suggested that necessary steps should be taken to overcome water shortage through negotiations with India and construction of water reservoirs within the country-formation of small lakes, re-introduction of wells in areas where water level is not very deep, besides development and introduction of seeds with high yield per hectare.
The Ministry believes that loss of grains due to lack of storage facilities must be dealt with through establishing proper warehouse facilities and by storing crops purchased by the government. The ministry stressed the need for infrastructure development, including energy, through increased public-private partnership.
Business Recorder [Pakistan's First Financial Daily]
A five-day working week to save scarce resources, especially energy, and improved efficiency are two basic components of the plan. In addition, the Finance Ministry has also proposed a reduction in defence expenditure and in the number of ministers and advisors, recovery of written-off loans, displayable income tax token for small shops and tax on the income of rich landlords.
The two major expenditure items, straining the economy, are debt-servicing and non-development expenditure. "Systematically and gradually reducing defence expenditure and ensuring productive utilisation of resources", were cited by the sources as suggestions by the Finance Ministry for the austerity plan.
Officials expect that the chief ministers of the four provinces, Azad and Jammu and Kashmir (AJK) Prime Minister and representatives of Northern Areas will also participate in the meeting. The documents disclose that Prime Minister Gilani has constituted a committee under the chairmanship of the Finance Minister to make recommendations regarding austerity measures which could be adopted by the Federal, provincial, AJK and Northern Areas governments.
The Finance Ministry also sought feedback on the issue from the business community through Business Persons Council (BPC). The austerity plan was part of the Cabinet's agenda of November 4, 2009 meeting, but it was deferred reportedly because of paucity of time.
"Restructuring of public sector enterprises (PSEs), rationalisation of government size, review of current and Federal legislative lists, budgetary measures, substantial curtailment of foreign visits, use of commercial flights instead of chartered flights, expenses on public offices, two weekly holidays, security and energy efficiency and conservation are the main proposals of the austerity plan," the documents said.
These austerity measures, including input from Gallup Survey Pakistan and feedback from the Business Persons Council (BPC), were discussed by the committee in its meeting on August 18. A final committee meeting was held on November 3 prior to submission of the recommendations to the Cabinet.
The Finance Ministry's reforms unit recommended a number of austerity measures for economic stabilisation, which are parts of the austerity plan. The Ministry argued that inflation should be controlled to encourage savings, as this would create domestic funds for financing government expenditures. It has been suggested that funds, saved through austerity, should be spent on development of the energy sector.
Other recommendations include the linkage of development programmes with result-oriented performance and the scope and modus operandi of the Special Development Program (SDP) to be reformed so that leakages could be plugged. Proper evaluation of donor-funded projects, particularly the projects financed through foreign borrowing, simplicity from the top downwards, and one dish be made compulsory for all types of functions without any exception in public and/or private sector.
The Finance Ministry has recommended that review of the government project planning and completion should be undertaken to prevent wastage, besides involvement of private sector in the development projects as this would ensure relevance, monitoring and oversight. Culture of excessive dependency on imports may be discouraged and ban on non-essentials must be imposed.
About industrial sector development, the Finance Ministry suggested that new explorations in minerals, POL, gas, etc must be encouraged and ownership and construction of houses for more than 800 square yards plot be banned. The Finance Ministry cautioned that shortage of water could be a major threat to agriculture sector in future.
The ministry suggested that necessary steps should be taken to overcome water shortage through negotiations with India and construction of water reservoirs within the country-formation of small lakes, re-introduction of wells in areas where water level is not very deep, besides development and introduction of seeds with high yield per hectare.
The Ministry believes that loss of grains due to lack of storage facilities must be dealt with through establishing proper warehouse facilities and by storing crops purchased by the government. The ministry stressed the need for infrastructure development, including energy, through increased public-private partnership.
Business Recorder [Pakistan's First Financial Daily]
