The finance department of Khyber Pakhtunkhwa is reportedly contemplating a significant reduction in the salaries of government employees in light of the escalating financial crisis faced by the province. Sources have revealed that the finance department has prepared a summary, currently under examination by the caretaker chief minister, presenting various scenarios for implementing salary cuts as a measure to prevent payment defaults.
The sources indicate that three options are being considered to reduce the salaries of government employees in response to the province’s deteriorating financial situation.
The first option involves revoking the 35% salary increase granted by the caretaker government in the current budget, which would save the province approximately Rs. 9 billion per month.
The second option under consideration is an immediate 25% cut in the take-home salary, which could result in a monthly saving of Rs. 7.8 billion for the government.
The third proposal involves eliminating special allowances such as executive allowance, health professional allowance, technical allowance, planning allowance, and other similar allowances, potentially providing a monthly relief of about Rs. 2 billion.
Officials are also contemplating the imposition of stringent financial discipline in medical teaching institutions and other entities that rely entirely on government funds. This measure is likely to be adopted in the near future.
While a senior official confirmed the existence of these proposals, he emphasized that they are still in the proposal stage and require further consideration. The official stressed that the government must take drastic actions to avoid a default situation due to increasing liabilities.
The official explained that the province is not receiving its net hydel profit from the federal government, which amounts to several billion rupees. Furthermore, allocations for tribal districts have not increased since the pre-FATA merger levels. The federal government had pledged Rs. 500 billion for the development of tribal districts but has thus far only disbursed a little over Rs. 100 billion for this purpose.