No proposal under study to hike govt employees pay, pension: Aurangzeb

ISLAMABAD: Finance Minister Muhammad Aurangzeb on Monday told the National Assembly that no proposal to increase the salaries of government employees is currently under consideration for the next financial year.

In response to a question from Malik Aamir Dogar during the question hour, the finance minister, in a No proposal under study to hike govt employees pay, pension: Aurangzeb written reply, stated that there is no proposal to review the allowances, pay scales or pensions of federal government employees. However, the issue of increasing house rent ceiling for employees is under consideration.

Later, the Finance Ministry issued a clarification, stating that Aurangzeb did not discuss revision of employees’ pay scales or salaries. The finance minister made no announcement or statement in the National Assembly regarding salaries, it added.

The ministry explained that the written reply was provided in response to a question from a member of the National Assembly, informing the House that no proposal to revise pay scales or significantly increase salaries and allowances for federal government employees is currently under consideration for the next financial year.

In a written reply to another question from Rai Hassan Nawaz Khan, the finance minister presented details of Pakistan’s foreign debt and liabilities over the last five years. As of June 2023, the total foreign debt and liabilities amounted to $126.14 billion, representing 43.03 percent of the GDP. In comparison, as of June 2018, the total foreign debt and liabilities were $95.237 billion, or 29.05 percent of the GDP.

The minister stated that in fiscal year 2024, Pakistan repaid $11.475 billion in foreign loans. Pakistan’s foreign debt and liabilities include external public debt, foreign exchange liabilities, public sector enterprises (PSE) debt, banks’ debt, private sector external debt, and debt liabilities to direct investors (intercompany debt).

In fiscal year 2023, $16.394 billion was paid toward external public debt, while in fiscal year 2024, $12.475 billion was paid. The data represents Pakistan’s external debt servicing (principal) and excludes the rollover of bilateral deposits.

In response to a question from Zartaj Gul regarding pledges made at the Geneva International Conference 2023 for flood rehabilitation, Minister for Economic Affairs Ahad Cheema stated in a written reply that development partners pledged $10.987 billion for post-flood climate-resilient recovery, reconstruction and rehabilitation.

The details of donors and bilateral countries include Australia, France, the European Union, South Korea, the USA, the United Kingdom, Denmark, Italy, Germany, Japan, Norway, Canada, China, Saudi Arabia, Vietnam, Azerbaijan, and Qatar. Multilateral institutions such as the Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), Islamic Development Bank (IsDB) and World Bank (WB) also contributed.

Of the total pledges, $6.384 billion was allocated for project/ programme financing, with $2.251 billion disbursed as of December 2024. Additionally, $4.6 billion was pledged for oil financing, with $1.519 billion disbursed as of December 2024. A total of $2.1 million was deposited in the Prime Minister’s Flood Relief Fund.

In response to a question from Syed Rafiullah regarding remittances, Finance Minister Aurangzeb revealed that remittances stood at $30.2 billion in fiscal year 2024. With ongoing reforms, this figure is expected to rise between $35 billion and $36 billion by the end of the current financial year.

The minister highlighted government measures against illegal money transfers through Hawala and Hundi, which have significantly increased remittances. He explained that several actions were taken in the last quarter of fiscal year 2023 to curb illegal financial practices, including a crackdown on unauthorised money transfer operators and administrative measures to regulate the sector.

To ensure secure and legal remittance processes, the State Bank of Pakistan increased capital requirements for exchange companies, allowing only credible businesses to operate. Banks were also directed to establish exchange counters to facilitate legal transactions. As a result, remittances previously routed through illegal channels are now being transferred through formal banking systems, significantly boosting overall inflows.

In response to a question regarding boosting exports, Commerce Minister Jam Kamal Khan informed the National Assembly that a comprehensive plan has been devised to increase Pakistan’s exports to $60 billion within the next five years.

The minister highlighted efforts to enhance exports and reduce the trade deficit, including the restoration of rice exports to Bangladesh, with plans to increase the volume from 60,000 tons to 200,000 tons.

During the question hour, in response to a query from Sahar Kamran, Minister Jam Kamal acknowledged the existing trade deficit and emphasised efforts to boost exports to address this gap. He pointed out key challenges, including limited value addition, lack of technology, restricted market access, and underutilisation of trade agreements such as GSP Plus and access to US markets.

He stated that the Ministry of Commerce, in collaboration with the Ministry of Industries and Production, is working to reduce business costs, promote manufacturing, and enhance trade diplomacy and value addition. Tariff reforms and policy adjustments are being implemented to support exporters.

Responding to a question from Syed Rafiullah, the minister reiterated that increasing exports and reducing the trade deficit is a collective effort involving multiple government agencies. The Ministry of Energy is working on lowering production costs, the Ministry of Power is addressing power allocation and pricing structures, while the ministries of National Food Security, Science and Technology, and Ports and Shipping are focusing on their respective domains to facilitate trade. The Federal Board of Revenue (FBR) has been tasked with addressing tax-related barriers to exports.

Meanwhile, a follow-up meeting was held here Monday between the federal minister for finance and revenue and the World Bank team to discuss Pakistan’s national growth and fiscal programme under the 10-year Country Partnership Framework (CPF), with $20 billion commitments.

According to press release issued by the Finance Ministry, the framework focuses on key development areas including health, education, climate resilience, and sustainable growth. Among others, the meeting was attended by senior officers from the Ministry of Finance and the Federal Board of Revenue.

The primary focus of the meeting was a continued discussion on the WB’s investment financing for economic reforms, the press release said, adding the bank team presented their ongoing work regarding the preparation of a comprehensive National Growth and Fiscal Programme.

This programme covers a wide range of critical subjects related to economic and fiscal reforms, including strategies aimed at unlocking constraints to inclusive and sustainable growth, mobilising revenues, improving expenditure quality, and enhancing efficiency and accountability in service delivery.

A major goal of these reforms is to create the necessary conditions for increased productive private investment while ensuring more public resources are allocated for inclusive development.

The World Bank also briefed the finance minister on their ongoing data analysis of policy proposals and recommendations gathered from various chambers, trade bodies and associations during the pre-budget consultations.

This collaborative approach is aligned with the government’s early budget process, which was brought forward to January this year to ensure a robust and realistic revenue policy based on sound economic considerations.

During the meeting, Aurangzeb emphasised the need for a comprehensive and integrated approach to fiscal, trade and private sector reforms that spans both the federal and provincial levels.

He highlighted the importance of designing reforms that are incentivised through outcome-based and performance-based indicators directly linked to human development and socio-economic growth.

The finance minister reiterated that a nationally coordinated approach, as exemplified by the National Fiscal Pact, is crucial to ensuring macroeconomic stability.

He stressed that this unified approach would be the cornerstone for achieving the country’s aspirations for inclusive and sustainable economic growth, ensuring the well-being of all citizens.

The meeting concluded with a shared commitment to continued collaboration between the Ministry of Finance, the World Bank and all relevant stakeholders, in order to advance the reform agenda and drive positive change for the future of Pakistan’s economy.