Cash-strapped Pakistan allows bureaucrats to earn unlimited fees for corporate board meetings

Pakistan’s cash-strapped government has lifted a cap on earnings for bureaucrats attending corporate board meetings, allowing them to collect unlimited fees even as austerity measures tighten across public institutions.

In a notification issued Monday (July 7), the finance ministry announced the withdrawal of a 2014 order that had limited such earnings to Pakistani Rs 1 million per year. The cap, initially introduced under then-Finance Minister Ishaq Dar, required civil servants to deposit any amount exceeding that limit into the national treasury.

The latest order, issued on June 12 with the approval of the former federal cabinet, stated that the previous restriction stood “withdrawn ab-initio,” meaning it is to be treated as if it had never been issued. This legalises any board-related earnings by officials during the current financial year, regardless of amount, Dawn reported.

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The 2014 cap was largely ignored in recent years despite a categorical reaffirmation last year. Its sudden withdrawal now comes as Pakistan faces persistent economic turmoil and fiscal challenges.

Austerity imposed elsewhere

While easing restrictions for senior government officials, the finance ministry also issued a separate notification extending austerity measures across the federal government. These restrictions now apply to attached departments, state-owned enterprises (SOEs), statutory bodies, and regulatory authorities.

Under the directive, SOEs must treat the austerity measures as binding instructions from the federal government in accordance with Section 35 of the SOEs (Governance and Operations) Act 2023. Statutory bodies must follow the measures under their respective governing laws.

The measures include a total ban on the purchase of new vehicles, creation of new government posts, medical treatment abroad at public expense, and non-essential foreign visits funded by the government.

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Pension adjustment

In a move likely to offer some relief to retirees, the ministry also announced a 7% increase in net pensions for all civil pensioners. The adjustment includes civilians paid from defence estimates as well as retired personnel from the armed forces and civil armed forces.

The policy shift on bureaucratic board earnings has drawn criticism from analysts, who see it as contradictory in light of the government’s ongoing fiscal crisis and repeated appeals for international financial assistance.