Govt considers halving raise in salaries

Published: February 10, 2011

Govt proposes it should be applied to BPS 17 and above, PML-N wants it across the board. DESIGN: ESSA MALIK

ISLAMABAD: In an attempt to slash expenditure and impose new taxes to narrow down the budget deficit by over Rs150 billion, the government and the main opposition party have discussed the option of partially withdrawing a 50 per cent increase in the salaries of government employees, The Express Tribune has learnt.

The option was discussed on the second day straight of talks between negotiators from the government and the Pakistan Muslim League-Nawaz (PML-N) on a 10-point reforms agenda spelled out by Nawaz Sharif last month.

Sources said the government tabled a proposal to halve the 50 per cent salary increase given to public servants from July 2010. If taken, the decision will be effective from January 1 and applicable to all public servants in basic pay scale (BPS) 17 and above.

PML-N’s chief negotiator Senator Ishaq Dar in principle agreed to the proposal but put a condition: It must be applicable across the board, including the president, prime minister,  cabinet members and all other functionaries, he said.

“The budget deficit is not only the biggest evil but the biggest challenge too,” the sources quoted Senator Dar as saying. “Inaction will result in a budget deficit beyond the limit set by the International Monetary Fund (IMF).”

Senator Dar said the government and the opposition would have to agree on “firefighting measures, because there is no choice to improve the situation”.

Asked if his party agrees to new revenue measures why is it opposing reformed general sales tax (RGST), he said, “These measures will not revolve around the RGST.”

Other proposals floated by the government include saving Rs10 billion from the projected Rs70 billion spending on the people affected by the recent epic floods and restricting the Pakistan Railways subsidy to Rs20 billion as against the demand of Rs30 billion, the sources said.

On the revenue side, the government proposed doubling the federal excise duty rate on import of goods and increasing duties on cigarettes. The sources said that the government did not discuss the issue of levying RGST. The two sides will finalise these proposals today (Thursday).  These measures are meant to restrict the budget deficit to Rs924 billion, or 5.4 per cent of the total size of the economy, said the sources.

The government negotiators told the PML-N that if it did not support these initiatives, then the deficit could be as high as Rs1.37 trillion. However, even if the two sides agree to take these measures, the budget deficit would be still Rs120 billion higher than the revised target given by the IMF. The Fund jacked up the budget deficit ceiling to 4.7 per cent of the GDP to provide additional space for floods related spending.

If something positive comes out of these talks, the IMF staff-level mission will visit Islamabad by the end of next week, said an official of the finance ministry.

The IMF had suspended the $11.3 billion bailout programme in July last year.

“We want to give a message to the world that despite difficulties Pakistan will not let the budget deficit slip beyond a specific target,” said Finance Minister Dr Abdul Hafeez Shaikh after the meeting.

He said the government would apply a combination of resource mobilisation and expenditure cut to restrict the budget deficit. “But nothing will be done without evolving a consensus,” he added.

Published in The Express Tribune, February 10th, 2011.

on Twitter, become a fan on Facebook

Reader Comments (10)

  • naseer hussain
    Feb 10, 2011 - 9:30AM

    Halving the salaries will put the final death nail in to the coffins of both the political parties and will definitely result in deadly revolution.The palaces in Raivend and Karachi will be raised to the ground and hopefully we will get rid of these hypocrats.It is ironic that the
    politicians and technocrats only see the poor mans earnings(salaries). Why dont they look arround and open their eyes and see the palaces of corrupt and bank looters.Those who had suggested such measures are enemies of the parties and we will not see their faces in
    near futureRecommend

  • Feb 10, 2011 - 10:43AM

    cutting their salaries wont work out. They should decrease the size of employees. There are hundreds of employees who donot work in govt office just sit and take salaries.Recommend

  • Romm
    Feb 10, 2011 - 10:53AM

    if nawaz Sharif pays rupees five thousand as tax , obviously we will have to sacrifice.Recommend

  • Khalid Khan
    Feb 10, 2011 - 11:54AM

    Please do it. Government employees are not the only Pakistanis. There are crores of unemployed . These government employees from section Officer to the secretaries are the biggest drain on country’s economy.Recommend

  • barlas
    Feb 10, 2011 - 12:35PM

    Be careful by taking fools decisions.Recommend

  • shahid
    Feb 10, 2011 - 9:11PM

    Very stupid decision!Recommend

  • Kiran Khan
    Feb 10, 2011 - 11:05PM

    The coalition of corrupt political, industrial and feudal elite that constitutes quite a narrow-based ruling class in the country has been blatantly involved in money-laundering,tax-evasion,writing-off loans, land-grab and so on…, and from so many years. In addition, the present government (including the PMLN) has grossly mismanaged the economy through populist schemes like Benazir Income Support Program and Sasti-Rooti Scheme. Consequently the crunch time came! and still they are not ready to tax who must be taxed and are shifting the burden to salaried class. Government employees are already less payed as compared to the private sector. And the last increase (ad hoc relief) was the minimum the government reluctantly offered setting aside the much-awaited Pay and Pension Committee’s recommendation.
    It will be really shameful if a cut on that meager increase is imposed. The salaried class is already hard-pressed. This move if materialized will further marginalize them.
    But this vision-less, corrupt ruling elite is mindlessly pushing the country towards the edge—anarchy and chaos. Recommend

  • hasan kazmi
    Feb 11, 2011 - 10:58AM

    The raise in emoluments of government servants was moved on the recommendation of Pay and Pension commission. Some employees like Radio Pakistan have not yet been paid the raised pay and pension. It is a senseless idea to save money via valving the salaries or pension. Instead there are many other sectors which are not included in tax net; like Beauty Parlors who charge thousands to make a bride, workers of mind sciences, anchors of TV channels, owner of TV production houses who are minting money in millions without paying a single penny of tax.No cash memo is given for expensive electronic goods. Such drastic action will make a chaos. Government Salaried persons are the only class who regularly pay taxes and try to remain in their means. Recommend

  • Kiran Khan
    Feb 11, 2011 - 4:51PM

    The groups who should be paying but not paying any tax:
    The Big Landowners!
    The professional groups, doctors, architects, even teachers who earn a lot
    through private practice called private tuition but don’t pay any tax.
    They and the likes should be made to pay tax instead of further
    marginalization of the salaried class.
    No Einstein is required to understand.
    Would the commonsense be allowed to prevail??? Recommend

  • Kiran Khan
    Feb 11, 2011 - 5:23PM

    @Khalid Khan: Don’t make such a sweeping statement, rationalizing the size of government is a different thing and to squeeze the recruited ones quite different. How sympathy with unemployed means apathy towards the employed ones? Recommend

More in Pakistan