Pakistan government cease clearance of bills and salaries amid economic crisis

As the economic situation keeps getting worse in Pakistan, the government has instructed the accountant general to halt the clearing of bills, including salaries, due to the current economic crisis, according to local media reports.

According to official sources cited by The News International, the Ministry of Finance and Revenue also gave the Accountant General of Pakistan Revenues (AGPR) instructions to suspend clearing any bills for federal ministries/divisions and connected departments till further notice.

The newspaper reported that the operational cost-related releases faced difficulties mainly due to the country's economic hardship.

Pakistan's foreign exchange reserves, which fell to a critically low level of USD 2.9 billion a few weeks ago, have now risen closer to USD 4 billion, even as the country eagerly waits for the USD 1.1 billion tranches of funding from the International Monetary Fund (IMF).

Ishaq Dar, the minister of finance, acknowledged that it might not be accurate but vowed to respond after verifying it.

Sources told PTI that they went to the AGPR office for clearance of their outstanding bills but were informed that the Ministry of Finance had directed them to stop clearing all the bills, including the salaries, because of the prevailing difficult financial positions.

The exact reasons could not be uncertain why the clearance of bills was stopped immediately.

The sources said the salaries and pensions of defence-related institutions had already been cleared for next month.

While meeting on February 22 with a delegation of Rothschild and Co, Finance Minister Dar said, "the government was steering the economy towards stability and growth.”

"The government is committed to completing the IMF programme and fulfilling all international obligations,” he added.

Dar's commitment to unlocking the IMF tranche was visible on February 20 when the national assembly had unanimously approved the Finance (Supplementary) Bill 2023 or "mini-budget" - a move mandatory for seeking funding.

The bill increases sales tax from 17 to 25 per cent on imports ranging from cars and household appliances to chocolates and cosmetics. In addition, a general sales tax was raised from 17 to 18 per cent.

"The prime minister will also unveil austerity measures in the next few days," the minister told the lower house of parliament as the bill was passed, adding, "we will have to take difficult decisions".

The country's weekly inflation rate remained persistently high during the week that ended on February 23, coming in at 2.78 per cent week over week and 41.54 per cent year over year, according to official figures released on Friday.

(With Agency Inputs)

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