Austerity steps taken to cut fiscal deficit: Govt imposes ban on appointments -Pakistan Press Foundation (PPF)

Paksitan Press Foundtion

Austerity steps taken to cut fiscal deficit: Govt imposes ban on appointments

By Mubarak Zeb Khan

ISLAMABAD: At a time when the country is struggling with slow economic growth and insufficient jobs for youths, the government as part of its austerity measures has placed a ban on new employment for the current financial year.

The finance ministry has sent a letter titled ‘austerity measures during 2011-12’ to the ministries and departments, asking them that there will be a ban on purchase of physical assets, including vehicles, even for development projects, a 20 per cent cut in the travelling allowance, stationery, entertainment, advertisement, repair/maintenance and utilities.

According to the letter, officers will not be allowed to use air-conditioners before 11am and below 26 degrees. They have been told that utility bills should be rationalised, both sides of papers should be used, official lunches and dinners should be restricted and only one newspaper will be allowed to the officers.

The government aims to narrow its fiscal deficit from 6.2 per cent of Gross Domestic Product last year to 4 per cent during the current fiscal year.

Unemployment among highly-educated and skilled people is on the rise and government policies to provide jobs to people have been discouraging during the past few years. Statistics show that the large-scale manufacturing sector grew by a mere 1.14 per cent in 2010-11 against 4.9 per cent it witnessed in the previous year.

Figures compiled by the Federal Bureau of Statistics indicated that because of sluggish industrial growth the unemployment rate increased to 5.7 per cent during the April-June 2011 from 5.6 per cent over the corresponding period last year.

Renowned economist Dr Kaiser Bengali told Dawn that industrialisation could provide sufficient jobs to youths, but policies in the country had been anti-industrialisation.

He said the only solution to the unemployment problem was to bring changes to macro-economic policies of the government.

At the same time, Dr Bengali said, the government should start investment in infrastructure development to generate employment.

In the absence of industrialisation, the only way to curb unemployment was to create jobs in ministries and divisions. But the IMF has asked Pakistan to avoid further inductions into government offices in order to qualify for new loan

However, an official told Dawn that the IMF had never questioned the government’s policy of consistently enhancing the defence expenditure and the recent increase in the expenditures of presidency and prime minister’s secretariat.

The government has increased defence expenditure by 12 per cent to Rs495 billion for the current fiscal year. The expenditure of the President House has been raised by 12.88 per cent. The salary of more than 70 gardeners will eat away Rs13.31 million, while more than Rs1 million have been allocated for the maintenance of gardens of the Prime Minister’s House.

On the other side, the official said, the IMF had asked the government to reduce subsidies in areas which directly or indirectly benefited people.

The government has drastically reduced the overall amount of subsidies to Rs166.44 billion in the current fiscal year from Rs395 billion in last year.
Source: Dawn