The Khyber Pakhtunkhwa finance department is exploring the possibility of slashing government employees’ salaries to tackle a growing financial crisis, it was learned on Wednesday.
As per sources, three options are under consideration, including revoking a 35% pay raise, resulting in monthly savings of around Rs9 billion. Another option is a 25% across-the-board salary cut to save approximately Rs7.8 billion monthly. The third proposal aims to eliminate various allowances, potentially saving about Rs2 billion monthly.
The government is also considering financial discipline measures for institutions reliant on government funds. Authorities emphasize that these are still proposals and are driven by the need to prevent default due to mounting liabilities.
The financial challenges stem from various factors, including delayed hydel profit payments from the central government and limited funds for tribal districts’ development. The need to adhere to expenditure targets agreed with the IMF and adopt austerity measures is emphasized.
In the first quarter of the current fiscal year, the caretaker government approved a 35% pay raise, a 17.5% pension increase, and various allowance hikes, contributing to the financial strain.
Neither the finance minister nor the finance secretary provided a response to inquiries regarding the matter.
