Expenditure cut steps likely in FY25 budget

The federal government is likely to announce measures in budget 2024-25 aimed at reducing expenditure massively including contributory pension scheme sans defence, civil armed forces and police, stoppage of funding to provincial development projects and sharing of BISP by provinces, well-informed sources in Cabinet Division said.

Last month PM Shehbaz Sharif constituted a seven-member committee to present a practical plan for reduction in government expenditure.

According to the notification issued by the Cabinet Division on March 11, 2024, composition of the Committee was as follows: Deputy Chairman, Planning Commission (Chairman); Secretary, Cabinet Division (member); Secretary, Finance Division (member); Rashid Mahmood Langrial, Additional Secretary Incharge, I&P; Kaiser Bengali (member); Farrukh Saleem (member); and Muhammad Naveed Iftikhar (member).

The Terms of Reference (ToRs) of the Committee were: take stock of all reports commissioned so far, including report of the National Austerity Committee notified by Finance Division, for institutional reforms etc. aimed at downsizing of the Federal Government; capture all the progress made so far in downsizing/rightsizing of Federal Government; prepare strategy and implementation plan for all remaining recommendations with timelines; and any other proposal (relating to PSDP, pension scheme, etc.) that can be helpful in reducing government expenditure.

The Committee argued that with implementation on proposed measures, government’s expenditure can be curtailed by up to Rs300b per annum. The sources said a study to assess size of the federal government and preparation of a set of proposals for consideration of the main Committee has been conducted by Dr. Kaiser Bengali.

Dr. Farrukh Saleem was requested to examine the proposals prepared by Finance Division to reduce expenditures of Pakistani Missions abroad and share the analysis with the main committee.

The sources said the committee recommended that all recruitments in Federal Govt, barring Defence, Civil armed forces and police service, commencing July 2024, shall be on contributory pension scheme.

It has also proposed a complete ban on creation of new universities under HEC, as this places extra burden on the federal government. For all public sector provincial universities, the finances shall be met from the respective provinces and not HEC.

Provincial governments to share financial responsibility in costs of social protection program, ie, BISP for respective provinces. The sharing to be defined and contributions to be made in a staggered manner starting from 25%. However, special concessions shall be considered for under development regions like Balochistan and the merged Districts, the sources said, adding that Planning Commission is tasked to carry out due diligence in sponsoring PSDP funded projects.