EDITORIAL: Finance Minister Hammad Azhar has hit the road running. After making inflation his top priority, since it is the people’s most pressing problem, he seems to have very quickly turned his attention to trimming unnecessary payment obligations on the part of the government. And he is right to emphasise the need to rationalise salaries, pensions, allowances, and perks offered to government employees because they are a huge burden on the exchequer and just not sustainable any longer. He admitted as much during a meeting with the chairperson of the Pay and Pension Commission (PPC), which incidentally is already in the process of consulting with stakeholders to carve out a financially viable arrangement for disbursement of pays and pensions. That would naturally lead one to assume that at least some of the necessary homework has already been done, so it shouldn’t take too long to get the ball rolling on this initiative.
Unfortunately, things are not so straight forward and the new finance minister might find his enthusiasm running into something of a brick wall. The PPC was constituted two years ago but remained largely dysfunctional because, according to the press, its mandate seemed to militate against the prime minister’s programme for institutional reform and austerity, which led to the resignation of its previous chairman because of ‘non-cooperation from relevant agencies’. And the PM’s desire to provide relief to government servants and pensioners in next year’s budget, because of all the unrest caused by high prices, has complicated matters even further because it would amount to turning the wheel backward on the whole thing. Still, Finance Minister Hammad Azhar has no choice but to move forward with this because the pays and pensions burden has increased so much that the State Bank of Pakistan (SBP) has raised a red flag and even international lenders have expressed serious concern.
No doubt this makes for a very complicated situation yet most countries, even some developed ones, struggle with such issues. The thing is that government pensions should be paid to personnel of the armed forces and on the civilian side to those inducted through the public service commission process. That much is understandable. But in our case, the effect of the nationalisation drive of the 1970s, which expanded the government sector, on the way pensions are paid to departments and organisations within the government, which do not recruit on the basis of public service commission, was never reversed and government after government has extended this benefit. And now the time has come that reform is simply unavoidable.
That the government is finally expected to appoint an actuarial firm within days to study the actual costs and ramifications of the growing pensions’ bill is welcome news. Yet no matter what conclusion it reaches it will not be possible to take any meaningful action if there is any more non-cooperation, or worse, attempts to torpedo PPC’s work from other departments. Sorting out such things is, unfortunately, part and parcel of the job of finance minister in this country. So the sooner Hammad Azhar understands this, and does something about it, the better for him and the people whose lives he’s been brought at this late hour to make more bearable. This is one of those things that take a long time to play out even when everybody involved is fully on the same page because of the large number of employees and transactions involved.
It’s a good thing that this issue has come to the surface just when the Pakistan Tehreek-e-Insaf (PTI) government feels forced to reinvent the wheel, so to speak, when it comes to its economic policy to keep public discontent from snowballing all the way to the next general election. It has changed the finance minister, decided to negotiate a “new programme” with the International Monetary Fund (IMF), and clearly wants to be seen taking people’s most serious problems more seriously than before. But no, or very little, good will come from any of this if the government fails to create necessary fiscal space. That is why platforms like the PPC will play a very important role because they will help cut cost while the government tries to expand its revenue base. How this works out will test not just Hammad but also the man he answers to in government.
Copyright Business Recorder, 2021
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