Austerity is practised at two levels: economic and political. At the economic level, austerity is an attempt to reduce the government’s budgetary deficit by reducing government expenditures. At the economic level, austerity is an attempt to enable the government to pay off its debts.
At the political level, austerity is a message to citizens that their taxes are not being wasted by, and on, public officials. At the political level, austerity is a message to lenders – both domestic and foreign – that the government is serious about meeting its debt obligations. At the political level, austerity is also a message to credit-rating agencies that the government is capable of fiscal discipline.
On August 24, the federal cabinet, presided over by PM Imran Khan, announced the following austerity measures in its second meeting:
Step 1: the abolition of discretionary funds. The new government “decided to ban all the discretionary funds, including those of the president [and] prime minister”. For the record, the previous prime minister had doled out a colossal Rs21 billion out of his discretionary funds in just one year. That amounts to doling out an average of Rs58 million a day every day of the year.
According to Fawad Chaudhry, the new federal minister for information and broadcasting, the “discretionary powers of all the ministers to grant funds have also been withdrawn”.
Step 2: banning the discretionary funds of MNAs. For the record, the previous prime minister had doled out a colossal Rs30 billion to MNAs for ‘development projects’. That amounts to doling out an average of Rs83 million a day every day of the year. The new policy is to discuss ‘development projects’ in parliament.
Step 3: PM’s foreign tours. Previous governments have been allocating an amount of around Rs2 billion a year for the foreign tours of PMs. That amounts to an average allocation of Rs5.5 million a day every day of the year. The new policy is that the “special plane of the prime minister will not be used for foreign tours”.
Step 4: allocations for the PM Office. The budgetary allocation for the PM Office stands at Rs916 million or an average of Rs2.5 million a day every day of the year. My estimate is that this would probably be cut down by half.
Step 5: the Cabinet Division. The last time I checked, the budgetary allocation for the Cabinet Division was over Rs5 billion or Rs15 million a day every day of the year. I haven’t seen any specific austerity measures under this head, but I think expenses will come down.
Not to forget that the cost of the Peshawar Bus Rapid Transit project has gone up from Rs49 billion to Rs68 billion. Yes, the cost of the Lahore Orange Line Metro Train (OLMT) has also shot up by Rs50 billion (the original estimate was Rs162 billion).
For PM Imran Khan, denying Rs30 billion to MNAs won’t be easy – they would gang up against him. For PM Imran Khan, refusing to distribute discretionary funds worth Rs21 billion won’t be easy – all the beneficiaries would gang up against him. For PM Imran Khan, reforming the electricity sector won’t be easy – there will be resistance from within and outside the cabinet.
Yes, for the first time in our long, chequered history, a prime minister is actually tightening his belt in order to save a large chunk of Rs54 billion a year – that’s Rs150 million a day. More importantly, he is sending a message to all Pakistani taxpayers that the prime minister considers their taxes to be a sacred trust.
The writer is a columnist based in Islamabad.
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