akistan has reached a critical juncture amidst daunting economic challenges. It required a truthful appraisal of systemic deficiencies that have precipitated its perpetual reliance on International Monetary Fund for bailouts.

The main cause of these challenges is the entrenched bureaucratic inertia, which has impeded effective governance and exacerbated financial leakage. The Judiciary’s encroachment on the Executive domain has further muddled institutional efficacy, eroded public trust and undermined administrative autonomy.

The politicisation of accountability mechanisms has compounded these woes, hindered transparent governance and fostered a climate of uncertainty. In response to the pressing financial issues, the prime minister on February 20 formed an austerity committee chaired by the federal finance minister. The committee comprises the secretaries of Finance, Planning and Interior Divions, the special secretary for Cabinet Division and the additional finance secretary (Expenditure). It has been tasked with rigorous oversight and periodic reviews to enforce and relax stringent austerity measures on a case-to-case basis.

Following the establishment of the Austerity Committee by the prime minister, the media reported that during its meeting on June 12, to finalise the 2024-25 budget, the federal cabinet deviated from the Austerity Committee’s advice by opting to fill vacant positions from Grade 1 to 16 subject to approval from the Finance Division’s austerity committee.

Earlier in May 2024, the media had reported that the prime minister had proposed rigorous austerity measures ahead of the forthcoming budget. These included abolition of approximately 70,000 positions in BS 1-16 and restructuring or merging of nearly 80 federal government entities. The recommendations were aimed to achieve substantial savings, including Rs 200 billion from subsidies, Rs 200 billion from development expenditures, Rs 55 billion from civil government operations, Rs 60-70 billion through the single treasury account, Rs 100 billion from conservation initiatives, Rs 174 billion from divesting non-strategic state-owned enterprises, and potentially up to Rs 1 trillion annually in medium-term savings, particularly through a proposed 15 percent reduction in non-combat defence expenditure.

The media further reported that the government faced a significant challenge with its growing wage and pension obligations. The budget has allocated Rs 839 billion for running the civil government and Rs 1.04 trillion for pensions (Rs 662 billion for military and Rs 220 billion for civilians).

Political considerations often influence appointments to low-level positions.

The media also reported that in May, the National Assembly raised Parliament House allowance from 60 percent to 100 percent of basic pay for employees in Grades 1 to 22. Similarly, fuel and electricity subsidies for these employees were raised from 35 percent to 65 percent of basic pay.

The National Assembly’s budget for the fiscal year 2024-25 is Rs 7.3 billion, up by Rs 2.3 billion (46 percent) over the previous year. The Senate’s budget rose to a record Rs 5.2 billion, an increase of Rs 1.9 billion or 58 percent. The budget for the President of Pakistan’s office, too, witnessed an extraordinary increase, touching Rs 2.2 billion, marking a 62 percent rise compared to the previous year’s allocation.

However, in a decision on June 12, the federal cabinet approved a cap of Rs 1 million annually on perks for bureaucrats attending board meetings, aiming to curb excessive expenses. Any earnings exceeding this limit have to be returned to the treasury.

Implementing rigorous performance evaluations is necessary to enhance efficiency and accountability. Clear targets and strict accountability can optimise service delivery and resource management, boosting productivity and revenue generation.

The media further reported that concerns arose over high payments, such as $5,000 (Rs 1.4 million) per meeting at Pak-Arab Refinery Limited and around $3,500 (Rs 1 million) at Pakistan Telecommunication Company Limited. Government secretaries rotate through these boards, with fees ranging from Rs 100,000 to Rs 250,000. Previous attempts to cap the fees at Rs 600,000 annually were unsuccessful. This prompted the cabinet to enforce stricter regulations under the State-Owned Enterprises (Governance and Operations) Act 2023, limiting directors to five entities, including subsidiaries.

These lucrative allowances for bureaucrats, raise questions about the country’s governance system. The Bertelsmann Stiftung’s Transformation Index for 2024 rates Pakistan poorly on the Governance Index. Scoring 3.26 out of 10, Pakistan ranks 112th among 137 countries. Its scores on Economic and Political Transformation were 3.64 and 3.65, respectively, with rankings of 112th and 99th.

It is strange that while the government claims to be enforcing austerity measures and has imposed hefty taxes on industries and the working class, it has also sanctioned substantial allowances for parliamentarians. This paradox underscores a painful lapse and laxity in fiscal discipline and governance priorities.

Our policymakers need to realise that austerity measures may not yield positive outcomes unless accompanied by vigorous performance evaluation criteria for officials. The government must focus on enhancing good governance practices, ensuring each institution operates within its defined boundaries. Strict accountability measures are necessary to maintain fiscal discipline and transparency.

Government officials must be held accountable for their role in SOEs. These entities have amassed over Rs 905 billion in losses in 2023. The National Highway Authority leads with Rs 412 billion. Thorough accountability is essential for enhancing the SOEs’ self-sufficiency.

The government has allocated Rs 1,021 billion to support these SOEs, which is nearly 10 percent of the budget. The financial performance of the SOEs has been a longstanding concern. They reported net losses of Rs 202 billion for FY-2022-23, a 25 percent increase over the previous year. These entities heavily depend on government subsidies and bailouts, exacerbating the deficit.

By ensuring efficient management and accountability in SOEs, the government can optimise resource allocation and enhance service delivery. This, in turn, will stimulate economic activity, create employment opportunities and improve public welfare. Moreover, improving governance will attract private investment, fostering a conducive business environment and accelerating overall economic growth. Ultimately, robust governance in SOEs will help Pakistan achieve its sustainable development goals and alleviate fiscal pressures on the government.

The increased allocations for parliamentarians and government officials, juxtaposed with claims of austerity, undermine public trust. Without stellar performance, these allowances appear unjustifiable.

Rigorous performance evaluation is necessary to enhance efficiency and accountability. Clear targets and strict accountability can optimise service delivery and resource management, boosting productivity and revenue generation. Austerity alone is insufficient. Transparency, accountability and governance reforms are also essential. These pillars strengthen public confidence, attract investments and sustain economic growth.

Dr Ikramul Haq, an advocate of the Supreme Court and writer, is an adjunct teacher at Lahore University of Management Sciences.

Abdul Rauf Shakoori is a corporate lawyer based in the USA