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In an effort to boost efficiency, Islamabad is contemplating reorganising ministries and introducing new pay scales for senior officials and bureaucrats. As per credible reports, the civil service reforms committee put forth a proposal which suggested that ministries should be categorised and compensated considering the workload they are subjected to.

A senior official revealed that members of the committee were considering abolishing the preexisting Basic Pay Scale (BPS) in favour of a new system. However, reports claim that shelving the BPS may not be feasible given the existence of pay variations among different services.

The committee might add BPS-23 and BPS-24 to the pay scales. Currently, the BPS is capped at BPS-22, reserved for grade 22 public officers. The reason behind adding additional pay scales is to attract more talented individuals to work for the public sector.

Members of the committee debated regarding the inefficiencies that the current BPS system was causing. Committee members outlined the financial losses the national exchequer had to bear because of not having highly skilled officials on the Neelum-Jhelum hydropower project.

The chair highlighted that approximately seven federal ministries were facing significant shortfalls in terms of human resources. Reports hint that the power and energy ministries require a large number of talented individuals to run daily operations – which may be possible by offering financial incentives such as higher initial salaries.

According to credible reports, the Economic Affairs Division (EAD) released the results of a study that considered municipal and federal benefits that public servants are entitled to. Moreover, the aforementioned study outlined differences in compensation across regions and considered the effect of improving the benefits public servants are entitled to after their retirement.

While the committee’s finance secretary announced that the commission was against the abolishment of the BPS system, he did concede that the pay of officers should be adjusted considering the magnitude of their workload and tasks.

A sizable portion of members reportedly suggested that housing benefits be monetised for government officials. However, if put into motion, this step could result in the national exchequer losing out on over 23 billion rupees per annum.

This could prove to be fiscally damaging for cash-strapped Pakistan, which is already struggling to follow the austerity measures mandated by the International Monetary Fund (IMF). The additional finance secretary opposed monetising housing benefits as this would pave the way for other government employees to request similar benefits.

In a bid to control circular debt in the power sector, Islamabad has begun discussions with commercial banks to negotiate more favourable terms. As per reports, the loans amount to a staggering 1.25 trillion rupees and restructuring this debt could alleviate fiscal pressure on the budget.

Currently, Pakistan is part of a $7 billion International Monetary Fund (IMF), which mandates austerity measures to help the country escape its economic woes. Part of the fiscal tightening mandated by the IMF can be completed by securing more lenient terms on outstanding loans.

While speaking to a reputable international organisation, Power Minister Awais Leghari revealed that the loan amount would be repaid in approximately five to seven years. According to reports, the term sheets, which contain the terms and conditions of the loan agreement, have not yet been inked as discussions continue.

The government has accrued this debt as it is either the sole owner or largest shareholder of the majority of power companies. However, these state-owned power companies have been posting up large losses, which ultimately Islamabad has to cover.

The aforementioned losses are caused by unpaid bills and subsidies to the power sector. Line losses and administrative inefficiencies have also significantly contributed to generating losses for power companies.

The IMF has recommended several policy measures to counter rising debt levels in the power sector. Islamabad has already raised energy prices at the behest of the international creditor to raise revenues.

However, the national exchequer cannot bear to clear the loans the sector has accumulated over the years. As such, the federal government has reached out to commercial banks to ascertain which banks are interested in helping Islamabad restructure its debt obligations.

According to Leghari, the banking system has the liquidity and appetite to lend funds to the government. This claim holds merit as Pakistani banks have recently had abysmally low Advance Deposit Ratios (ADR). A low ADR means that banks are not issuing sizable amounts of credit to the private sector.

Instead, domestic commercial banks have been lending money to the government or purchasing government bills and securities. Their appetite to issue credit to the government may facilitate ongoing negotiations.

To ensure that the government does not run into similar issues further down the line, lawmakers and relevant authorities have reportedly decided to end ‘government-guaranteed debt’ and transition to a revenue-based system.

Under the revenue model, loans are to be repaid with funds collected from electricity bills. Additional borrowing and requests for subsidies would need to be curbed to ensure the power sector’s financial independence.