MoF to set up body to look into expenditure, allowance structure

The Federal Cabinet has allowed the Finance Ministry to set up independent commissions to analyse expenditures and removal of disparity in allowance structure, official sources told Business Recorder.
"Cabinet has approved proposals of Finance Ministry relating to establishment of independent commission to scrutinise all development and current expenditure with a view to ensure necessity, efficacy and value to the public exchequer and another Commission to bring equity and fairness across the public service pay and allowances structure for removing the substantial disparity that has cropped up with the passage of time," sources quoted from the decision of the federal cabinet which approved the federal budget on June 3, 2011. The recommendations of the ''commission'' would form the basis of economic measures in public spending.
"In addition to transfer of funds to provinces, debt servicing and security/defence-related expenses had increased significantly with the consequence that federal government is being forced to borrow to survive," sources quoted Finance Ministry''s top brass as explaining to the cabinet .
According to sources, the members of the cabinet raised a number of questions regarding the national economy, taxation system, broadening of tax base and relief measures for the people, particularly the poor segments of the society. "Cabinet members referred to the plight of the fixed income salaried class vis-à-vis the unprecedented increase in prices of essential commodities thereby causing unfettered inflation," the sources continued.
Prime Minister, Syed Yousaf Raza Gilani, who chaired the special cabinet meeting, observed that the country could afford any iota of carelessness, hence, the economic team and the line Ministries would have to work proactively in core area of power sector reforms, revitalising of tax machinery, improvement in tax to GDP ratio, fast track development of hydel projects and better governance in the bleeding public sector corporations.
The Cabinet was informed that it would be necessary to further strengthen the austerity measures taken in March 2011, at the time of new budget. These will include: (i) continuation of ban on new recruitment due to surplus staff from devolution process and purchase of durables, already surplus from devolved ministries; (ii) rationalisation of fuel entitlement, travelling allowance and expenditure on stationery and newspaper periodicals; and (iii) establishment of ''independent commission'' to examine the structure of pay and allowance across the public services and bring equity and fairness across them.
Finance Ministry also informed the Cabinet that additional resources, to the tune of Rs 350 billion, would be transferred to the provinces under the National Finance Commission (NFC) Award, whereas PSDP of the federal government would remain the same while there will be more than 80 percent increase in provincial PSDPs. This will have salutary effect on provision of social services being provided by the provinces to its citizens.
Finance Ministry acknowledged that apart from security related constraints, there were weaknesses in the economy due to poor governance, shortfall in energy and in private sector investment leading to non-creation of new jobs.
While briefing the cabinet on the way forward, Finance Minister said that the government''s agriculture financing policy will help transfer wealth to the farmers, exports have risen by 28 per cent and aided by increased workers remittances, will help further stabilise the external sector, targeted subsides will be given to sustain the assistance to the poorest segments through Zakat, Bait-ul-Mal, BISP etc.