New Delhi, Feb 12 (IANS) A structural issue responsible for perpetuating Pakistan’s dependence on the IMF is its failure to control expenditure, which has spiralled, at both federal and provincial levels, via salary increases far exceeding inflation for the civil, judicial, and military bureaucracies alongside expanding vehicle fleets, luxury housing, plush offices, overseas junkets, and discretionary budgets, often without mandates, sunset clauses or performance tests, according to an article in the Pakistani media.
Spending routinely outpaces revenues, not because the state invests productively but because it lacks discipline over what it creates and consumes, the article in the Dawn newspaper said.
The federal and provincial governments are huge employment bureaus. Even after the 18th Amendment, Islamabad has retained over 40 divisions and 400 attached departments, with a combined employee strength of 1.2 million. Moreover, creating new departments, authorities and special units, with full secretariats and perks, has become too easy; trimming by almost two-thirds is needed, alongside an immediate hiring freeze. Bureaucratic and political resistance preserves positions of authority, it pointed out.
State-owned enterprises are another fiscal sinkhole. Accumulated losses have crossed Rs 6 trillion, growing by nearly a trillion annually, despite repeated bailouts through grants and equity injections. Projects are rushed for political visibility, cost-benefit analysis is perfunctory, feasibility is weak and future operating costs are ignored. The result is half-finished projects, mounting liabilities and financial gaps filled through debt or inflation, the article lamented.
The perks system lies at the heart of the country’s dysfunction. Incentives shift from performance to rent extraction when compensation is delivered through houses, plots, cars, and protocol rather than transparent pay. Bureaucrats stop optimising the system and start optimising access to these privileges. Capital gets locked in prime land and elite enclaves instead of circulating through markets, it observed.
Trade policy is the silent enabler of the crisis and sustains IMF dependence. Pakistan remains poorly integrated into global value chains; it’s viewed as a peripheral supplier rather than a reliable, scalable partner, the article pointed out.
The country safeguards and sustains inefficient constituencies of incumbents and entrenched special interests behind tariffs and non-tariff barriers. Exporters bear this cost through expensive inputs, an overvalued exchange rate, delayed refunds, and policy uncertainty, leading to a narrow export base and chronic foreign exchange shortages. This anti-export bias functions as a subsidy to rent-seekers financed through IMF borrowing, the article stated.
–IANS
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