No salaries, ban on luxury cars and 5-star hotels: Pakistan’s austerity measures for politicians who looted the nation
No salaries, ban on luxury cars and 5-star hotels: Pakistan’s austerity measures for politicians who looted the nation
Pakistan is nearly bankrupt as its faces its worst economic crisis. As the Everyman continues to suffer with food and fuel becoming unaffordable, the country’s infamous elite are in the spotlight. They dominate politics and control the economy and are blamed for usurping public resources. Now Islamabad is desperate for the International Monetary Fund (IMF) bailout and has no choice but to penalise the fat cats.
On Wednesday, Pakistan prime minister Shehbaz Sharif announced a slew of austerity measures. If he is to be believed, it will save the country Rs 200 billion (in Pakistani currency) annually.
What are the austerity measures? We take a look.
The country is desperate for funds as foreign exchange reserves drop to around $ 3 billion, which are sufficient to cover barely three weeks of imports.
On Monday, it imposed an additional Rs 170 billion in taxes. The Pakistan parliament gave a go-ahead for the government to raise taxes on a raft of luxury imports and services. Sales tax has gone up from 17 to 25 per cent on imports of cars, household appliances, chocolates and cosmetics. People will also have to pay more for business-class air travel, wedding halls, mobile phones, and sunglasses, reports AFP.
The IMF is clear: Make the rich pay taxes and subsidise the poor.
Also read: Pakistan crisis: Can the country be saved from collapse?
No salaries, ban on five-star hotels
To avoid default, Pakistan is toeing the line. Now it has turned its attention to the political elite. Sharif announced measures to cut official expenditures.
There will be no salaries or any other benefits from the state treasury for Cabinet members and advisors. They have also voluntarily decided to pay their utility bills.
State ministers and special advisers to the premier had decided “willingly” decided to forego their salaries and perks. Sharif said that all ministers would now pay their telephone, electricity, water and gas bills, according to the report in Dawn.
Stop the use of luxury cars
Cabinet members will stop the use of luxury cars and travel in economy class. There is a ban on staying in five-star hotels during foreign trips. This would also apply to all government officers. Support staff are not expected to tag along during such visits, reports Dawn.
There is a ban on the purchase of all luxury items, including new cars until June 2024 in Pakistan. Last year, even as the country was in a dire situation and imports were restricted, it allowed over 2,000 cars, worth USD 53.05 million, which is Rs 118.2 billion in local currency, to be imported. Cabinet members are now expected to return luxury vehicles which will be auctioned.
“Until June 2024, which means till next year, there will be a complete ban on buying luxury items. Until June 2024, there will be a complete ban on purchasing all types of new cars,” Sharif announced. He also said that government cars being used by senior ministry officials, who were already availing of the car monetisation service, would be recalled, reports Dawn.
Sharif has also instructed the Ministry of Foreign Affairs to cut the number of foreign missions and reduce their offices. The expenditure of Pakistan missions will be cut by 15 per cent.
Only one dish at events and more
On Thursday, the Pakistan PM said that the colonial period palatial official accommodation by district officers would be put to better use. The other measures include the opening of government offices at 7.30 am in summer. “To conserve gas and electricity, the advice for opening offices at 7:30 am during the summer has been accepted,” Sharif said.
At government functions, only one dish would be served to save costs. “There will only be one dish in all the ministries in Islamabad, the Prime Minister’s House and the federal Cabinet. If it is tea time, then only tea and biscuits will be provided,” the PM said.
While this policy does not apply to events held for foreign guests and dignitaries, the spread would not be lavish. “We will do it in a simple manner,” he said.
For Pakistan, every rupee matters and hence it has announced stringent measures. Security vehicles will no longer be provided to government officers and to reduce travelling expenditure, teleconferencing will be promoted.
The premier said that rulers, parliamentarians, bureaucrats, and officials by heads of other governments and states and foreign dignitaries would not be allowed to retain state gifts worth more than $300.
More austerity measures will be announced during the June Budget. Pakistan has put in place an energy conservation plan and if that is not implemented, the PM warned that they will be forced to cut the power supply to malls and big markets.
“This is need of the hour,” he said after the Cabinet meeting in Islamabad. “We have to show what the time demands from us and that’s austerity, simplicity and sacrifice.”
Shehbaz emphasised the need for all citizens, including government officials, to do their part in addressing the country’s economic challenges, urging them to embrace a culture of frugality.
However, the latest measures have been slammed by former PM and Pakistan Tehreek-e-Insaf (PTI) chairman Imran Khan, who asked rulers to bring back the country’s “looted” money. “If you want to do something [for the country], then bring your [looted] money back from abroad,” Khan said on Wednesday.
Staring at default
To avoid a debt default, Pakistan has unveiled $764 million of cost-cutting measures. These are needed to meet IMF conditions and help secure a $6.5 billion bailout.
The government has already increased the price of petrol and gas and the General Sales Tax (GST) on goods. This is pinching the common, as prices of ghee, aerated drinks, and other food items have gone up. Its currency has weakened after the IMF called on the nation to enable a market-determined exchange rate.
It seems like a lot and inflation is expected to rise further. But this is what it needs to do to keep the country afloat.
With inputs from agencies
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