Govt introduces austerity plan to ensure prudent utilisation of public money

Purchase of all vehicles and machinery and equipment banned

ISLAMABAD  -  In a bid to ensure prudent utilisation of public money, the federal government has introduced an austerity plan that included ban on purchase of all vehicles and ban on purchase of machinery and equipment.

“To ensure prudent utilization of public money, the Prime Minister, in terms of Rule 15(1) (a) of the Rules of Business, 1973, has been pleased to approve the following Austerity Measures for Financial Year 2023-24 with immediate effect,” said a notification of the ministry of finance. Under the plan, there shall be a complete ban on purchase of machinery and equipment from the current budget, except for medical machinery/equipment.

Meanwhile, under the austerity measures, there shall be a complete ban on purchase of all vehicles except ambulances, buses for educational institutions, solid waste vehicles, tractors, fire fighting vehicles, motor bikes; and “There shall be ban on creation of new posts under PSDP/current budget during Financial Year 2023-24”.

Meanwhile, in a separate notification, the ministry of finance has constituted a committee for implementing austerity measures. In pursuance of the approval of the Prime Minister, the following Austerity Committee is hereby constituted with immediate effect including Finance Minister as Chairperson, Secretary Finance as Member, Secretary Planning, Development & Special Initiatives as Member, Secretary Interior as Member, Special Secretary Cabinet as Member, and Additional Finance Secretary (Expenditure) as Secretary.

The Terms of Reference (TORs) of the Committee shall be to periodically review and ensure implementation of austerity measures for Financial Year 2023-24; and to approve proposals for relaxation from the austerity measures on a case to case basis.

The government’s austerity measure came at the time when the country’s budget deficit was increasing. The consolidated fiscal deficit has been recorded at 2.3 percent of GDP (Rs2407.8 billion) in first six months (July-December) of the current fiscal year FY2024 against 2.0 percent of GDP (Rs.1683.5 billion) last year. While a primary surplus witnessed a continuous improvement due to contained growth in non-mark-up spending relative to markup payments. Primary surplus improved to Rs.1812.2 billion (1.7 percent of GDP) during Jul-Dec FY2024 from the surplus of Rs.889.6 billion (1.1 percent of GDP last year. Total expenditures grew by 45 percent to Rs.9261.8 billion during Jul-Dec FY2024 against Rs.6382.4 billion last year. Within total, current spending increased by 41 percent mainly due to a 64 percent rise in markup payments during the first six months of the current fiscal year, according to the latest data of the ministry of finance.

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