PM forewarns of more price hike

Cabinet approves sweeping austerity measures

ISLAMABAD:

Prime Minister Shahbaz Sharif announced on Wednesday a broad range of measures aiming to tighten the government’s belt but warned people to brace for more price hike due to the tough conditions of imposed by the International Monetary Fund (IMF).

The prime minister spoke to the media himself to unveil the austerity measures approved by the federal cabinet and expressed the hope that the government would be able to take the masses out of the current economic conditions.

“There will be more inflation in the country,” he cautioned. However, he added that the government was taking measures to mitigate the sufferings of the poor, by continuing various subsidies for them.

The highlight of the government’s austerity measures is the withdrawal of salaries and perks of the prime minister, minister’s special assistants and advisers, along with a 15% cut in the expenses of all government departments.

“For 75 years now, the lavish expenses of the governments have been borne by the poor,” Shehbaz said. “The rich have not rendered any sacrifices in the past 75 years but now they will have to, for the sake of the country,” he added.

“Be it the war of 1965, the earthquake or the floods, it was always the poor and the middle class who rendered sacrifices, while the children of the elite were getting expensive treatment abroad.”

IMF talks

Referring to the recently passed Finance (Supplementary) Bill, the prime minister said that taxes had been imposed on large companies, most of which on luxury goods along with phasing out of certain subsidies on the IMF’s insistence.

However, he warned, the IMF’s demand for reducing subsidies, might engulf the country in a new wave of inflation. “IMF asked us to reduce subsidies. They want us to subsidise only the poor but [to determine this] they have their own parameters,” he said.

Therefore, Shahbaz said, the subsidies for the poor would be maintained, announcing that the support amount for the poor from the Benazir Income Support Programme was being increased by 25%.

The prime minister said that the negotiations with the IMF were in the final stage and “we will meet all the conditions to continue the lending programme”. “The government has fulfilled almost all pre-conditions and an agreement with the IMF is expected soon.”

Austerity measures

Unveiling decisions of the federal cabinet, Shehbaz detailed an ambitious austerity plan at the federal government level to save Rs200 billion annually by slashing expenditures. He stressed that the austerity measures would yield far-reaching results.

The measures announced by the prime minister included:• All the federal cabinet members, advisers and special assistants will not draw salaries and other privileges;

• All members of the cabinet will pay the utility bills from their own resources and return all the luxury vehicles which will be auctioned;
• The cabinet members will use economy class during their visits abroad, while their assisting staff will not be allowed to accompany them;
• The cabinet members will not stay in five-star hotels during their foreign visits;
• All government divisions, departments, subordinate institutions and other entities under the federal government will slash their current expenditures by 15%;
• Purchase of luxurious vehicles will be banned;
• Senior federal government officers, utilising official vehicles besides availing the monetisation scheme, will return all such vehicles, while any officer violating this decision will be proceeded against;
• Extra security vehicles for cabinet members will be withdrawn and a committee headed by the interior minister will decide the matter in case of any threats;
• The travelling and daily allowances (TA & DA) of the officials will be reduced by utilising modern telecommunication facilities like holding Zoom conferences to save expenditures;
• All public housing in the city centres will be sold;
• No officer shall be allotted more than one plot and the excess plots shall be withdrawn;
• No new department will be created in the federal government and no new division will be created in any province;
• The government offices will be opened at 7:30 in the morning to save electricity in the summer;
• Low-energy devices will be installed at the government offices;
• Under the austerity policy, only tea and biscuits will be given at places like the Prime Minister’s House; and
• All government functions will have one dish.
Shehbaz emphasised that these measures were necessary to address the country’s economic challenges, including rising inflation and debt. He noted that the government was committed to restoring economic stability and promoting growth.

The prime minister requested the chief justices of the Supreme Court as well as all the high courts and the chief ministers of the provinces, Azad Jammu and Kashmir and Gilgit-Baltistan, to take similar decisions.

“The energy saving programme [which was announced a few months ago] will be strictly implemented now,” Prime Minister Shehbaz told the reporters. “If shops, commercial centres and markets stayed open after 8:30 pm, their power supply will be cut off.”

He stressed the need for the nation to embrace the culture of austerity. When asked how the minister would “survive” with these measures, Shehbaz said that “they will live their lives as they used to live [before coming into power]”.

The prime minister emphasised that only one security vehicle would be provided to the ministers as per requirement, whereas they would travel in economy class both on foreign and domestic visits.

Toshakhana

The cabinet also decided to make the data of Toshakhana (the government repository of gifts) public on the website. In the future, Shehbaz said that the prime minister would not be able to keep any gift worth more than $300 – or around Rs80,000 of the present day.

Addressing the cabinet earlier, Shahbaz said that the government was giving top priority to austerity because the situation “demands of us to be simple”. “The nation is going through difficult times. Everyone must adopt the austerity campaign.”