Bureaucratic spending up nearly 80 percent since 2022 despite austerity push

By Staff Reporter

ISLAMABAD: Despite a stringent austerity drive and aggressive efforts to downsize the federal bureaucracy, the government spending on civil administration and pensions has continued to surge, with double-digit increases in the first quarter of the current fiscal year, according to fiscal data released by the Ministry of Finance.

The report, published Monday by the Dawn newspaper, highlights a 13 percent rise in expenditures for the “Running of the Civil Government” from July to September, climbing to Rs161.2 billion from Rs142.5 billion in the same period last year. This uptick persists even as the government has abolished more than 150,000 posts over the past year and pursued “rightsizing” through mergers and closures of ministries, divisions and subordinate departments.

The increase shows the challenges facing Prime Minister Shehbaz Sharif’s administration as it navigates fiscal constraints imposed by successive International Monetary Fund programs. On paper, the government has maintained an austerity policy since 2021, with measures extended into the current fiscal year, including a complete ban on purchasing vehicles, machinery and equipment, as well as creating new posts across the federal government.

Yet the data reveals a persistent upward trend in administrative costs. In the first quarter of last year, civil government expenses rose 8 percent over the comparable period in fiscal year 2024, which itself had seen a 29 percent surge from fiscal year 2023. Overall, these expenditures have jumped nearly 80 percent since the first quarter of fiscal year 2022, when they totaled Rs89.5 billion. The full-year bill for running the civil government in the last fiscal year exceeded Rs892 billion.

Finance Minister Muhammad Aurangzeb, addressing the issue about a week ago, announced that the government had eliminated an additional 54,000 vacant posts across various departments, yielding annual savings of more than Rs56 billion to the national treasury. He added that the process of merging and restructuring several ministries and divisions was also underway as part of broader fiscal reforms.

Pension payouts, another inflexible budget item, have followed a similar trajectory. In the July-to-September quarter, payments totaled Rs249.5 billion, a 10 percent increase from the Rs223 billion disbursed in the same period last year. A year earlier, pensions had risen 9 percent. Over the past five years, these expenditures have ballooned by nearly 125 percent, from Rs111 billion in the first quarter of fiscal year 2022. At the end of the last fiscal year, the total pension bill stood at Rs911 billion.

In contrast, subsidy payments — which the government can more easily defer — showed sharp fluctuations. They surged sixfold in the first quarter to Rs120 billion from Rs20 billion a year ago. In the first quarter of fiscal year 2024, subsidies totaled just Rs2.5 billion, down from Rs93 billion and Rs74 billion in the two preceding years. Last year’s total subsidy bill reached Rs1.298 trillion.

Officials have attributed the austerity measures to the need for fiscal discipline amid economic pressures, including high inflation and debt obligations. But the Dawn report noted that various ministries, divisions and entities have found ways to circumvent the bans on one pretext or another, contributing to the ongoing rise in costs. The government’s claims of belt-tightening through staffing and structural reforms have done little to stem the tide, raising questions about the effectiveness of these initiatives in curbing entrenched bureaucratic spending.