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The Consequences of Government Excessive Expenditure: A Closer Look at Pakistan’s Economic Crisis

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Editorial

It is becoming increasingly evident that our leaders are either unaware of the severity of the economic turmoil we are confronting, or they are deliberately choosing to disregard it. The alarming profligacy in government spending, as evidenced by the recent retrospective approval of a record Rs 9.4 trillion in supplementary grants, paints a dire and urgent picture of fiscal mismanagement.

Despite assertions of implementing austerity measures and curbing excessive government spending, documents released by the finance ministry show that nearly 86 percent of the expenditure overruns occurred in the last 45 days of FY2022-23, during the previous government’s tenure. Blaming the caretaker authorities alone for this unsustainable extravagance is unfounded.

Further exacerbating the situation, the undisclosed spending overruns for the most recent 45 days of FY2023-24 are expected to surpass the already alarming levels. This reckless spending is attributed to borrowing Rs 6.55 trillion for domestic debt repayment, Rs 214 billion for foreign debt servicing, and budgetary overruns in various sectors including the power, water resources, defense, and civil armed forces.

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The recurring pattern of government departments surpassing their budgets reflects a widespread disregard for fiscal responsibility within official circles. Of greater concern is the inclination of authorities to incur unnecessary and irresponsible expenditures. Examples include the allocation of Rs 81 million in supplementary grants to the Prime Minister’s Office for staff stipends and considerable sums approved for maintaining judges’ residences.

While the finance minister’s emphasis on increasing tax revenue is valid, it only offers a partial solution to the crisis at hand. Equally crucial is the need for the government to modify its exorbitant spending patterns, particularly as such expenditures are primarily financed through borrowing, contributing to a mounting debt burden and exacerbating the economic hardship.

Promises to shut down poorly performing government entities, such as the Public Works Department, ring hollow when fiscal discipline is lacking in other critical areas. Even in cases where departments are slated for closure due to poor performance and corruption, placing surplus employees in a pool, entitling them to continued salaries and pensions, further strains the country’s economic resources.

It is evident that without addressing the culture of profligacy in government, implementing genuine austerity measures targeting the ruling elite, and addressing overstaffed departments, Pakistan’s economic woes will persist. Allowing the public to bear the brunt of lavish government spending will only deepen the economic crisis, creating a sense of urgency for the public to demand change.

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