PM office bonuses raise IMF concerns

Lender questions Rs24 billion grants, civil servants' honorariums

ISLAMABAD:

The International Monetary Fund (IMF) has questioned Pakistan’s decision to grant financial rewards to all the officers of the Prime Minister’s office and approval of Rs24 billion in supplementary grants amid the economic crisis.

The government sources told The Express Tribune that the global lender raised questions in a correspondence with the Ministry of Finance.

The IMF inquired regarding the Economic Coordination Committee (ECC) of the Cabinet approvals of Rs24 billion supplementary grants and award of honorariums for the PM’s Office. They said the nature of the IMF’s questions was more about the source of funding for these decisions.

IMF’s Resident Representative Esther Perez did not respond to a request for comments on the matter even after two weeks. She was asked to confirm the development and the IMF’s stance on the rewards to the PM’s office employees.
Despite the IMF’s intervention in the matter, it seems that Prime Minister Shehbaz Sharif and Finance Minister Muhammad

Aurangzeb was not in the mood to reverse the fiscally questionable decision. The Finance Ministry officials said it would be demeaning for the prime minister to reverse the decision on the IMF’s intervention.

But it will not be the first time that any prime minister would reverse his decisions on the IMF’s questioning. The Pakistan Democratic Movement (PDM) government had made changes in the June 2023 budget due to the IMF’s objections.
Former prime minister Anwaarul Haq Kakar could not secure the IMF’s nod for waiving off the electricity bills or at least recovering those in installments despite making public announcements.

A cabinet member claimed that the prime minister had not been properly briefed about the financial implication of the decision and no such decision would be made in the future.

The Express Tribune reported over two weeks ago that days before leaving for Washington to request the IMF for a new bailout package to avoid a default, Muhammad Aurangzeb approved four salaries in reward for officers working in the Prime Minister’s office.

The Prime Minister's Office’s employees are already getting higher than the standard pay packages.

The finance minister also approved two salaries in reward to the officials of the PM’s office - from grade 1 to -16 - taking their total reward to five salaries in just two months.

PM Shehbaz approved a fresh one-month salary in honorarium for his grade-17 to -21 officers and also restored three salaries in honorariums for the officers, which the former caretaker PM first approved and then withheld after The Express Tribune approached the PM office for a version.

The financial implication of the PM Shehbaz Sharif’s decision is over Rs51 million. The PM had cut the salaries of the federal cabinet ministers due to the prevailing grave economic situation.

The Fiscal Monitor report of the IMF indicated that the gap between expenditure and revenues may remain at 7.4% of the GDP for the fiscal year 2023-24 ending in June. This figure is nearly Rs1 trillion or 1% of the GDP higher than the deficit limit approved by the National Assembly.

Yet, the PM decided to open the public purse to appease the bureaucrats working in his office.

The sources said that the IMF also questioned the ECC’s decision to approve Rs24 billion in a supplementary budget to pay off liabilities of the government and clear the backlog developed due to the unrealistic annual allocations.

In its first meeting, the ECC approved Rs7 billion in additional subsidies for the people of Gilgit-Baltistan. The government had allocated a subsidy of Rs9.5 billion for the provision of 150,000 tons of wheat in the budget. However due to the increase in prices, the allocation was fully utilized by the end of March.

The ECC also approved Rs4.1 billion to pay off liabilities of the employees of SME Bank, which was being closed. The ECC approved Rs3.8 billion to cover a foreign loan for the Higher Education Commission.

It approved a grant of Rs1.7 billion for the Passport Office employees serving abroad. The government approved Rs300 million in a supplementary grant for Pakistan Rangers for the procurement of uniforms. It had approved Rs103 million for the Frontier Corps Balochistan to repair a VVIP helicopter.

Another Rs433 million was approved for the Pakistan Coast Guards to raise one more battalion for an anti-smuggling drive. To keep the matter secret, the Finance Ministry did not issue a press statement after the ECC meeting. But The Express Tribune had reported the ECC’s proceedings.

During the second review talks, the IMF had urged Pakistan to refrain from issuing even the technical supplementary grants aimed at achieving the primary budget surplus target of 0.4% of the GDP for this fiscal year.

Pakistan had missed the target for the first quarter of this fiscal year and the IMF gave a waiver to make the country eligible for the $706 million tranche. The World Bank stated earlier this month that the country is likely to miss this core IMF goal of achieving a primary surplus by the end of the fiscal year.