Why is IMF Still Silent Over Punjab’s Ridiculous 860% Salary Boost?

The International Monetary Fund (IMF) has historically never hesitated to aggressively deny Pakistan’s outlandish expenditure requests. But not last week. Punjab Assembly lawmakers casually passed a new bill to give provincial lawmakers big increments on their salaries. Surprisingly, the chief minister does not get the biggest take-home purse. The Punjab Assembly’s recent approval of salary increases, effective January 1st, 2024, means that the monthly pay for Members of the Provincial Assembly (MPA) has surged to above Rs. 400,000 from a prior amount that remains unspecified but can be reasonably assumed to be lower. In percentage terms, this equates to an increase of at least 100%, based on the assumption that the original salary was below Rs. 200,000. More striking are the raises for provincial ministers, whose salaries have risen from Rs. 100,000 to Rs. 960,000—a staggering increase of 860%. Similarly, the Speaker’s salary has been elevated from Rs. 125,000 to Rs. 950,000, marking a near 660% surge. The Deputy Speaker’s salary has also risen sharply from Rs. 120,000 to Rs. 775,000, a remarkable 550% increase. The salary for Parliamentary Secretaries has been boosted from Rs. 83,000 to Rs. 451,000, representing a 443% hike. Special assistants and advisers to the Chief Minister will now earn Rs. 665,000, up from Rs. 100,000—an increase of 565%. We need some clarity here. The IMF has repeatedly emphasized the need for fiscal restraint, particularly in the context of public sector expenditure. The IMF has historically reacted strongly to off-budget expenditures and unsustainable fiscal policies. In 2023, for instance, the Fund the federal government’s request any tariff adjustment or provision of additional subsidy on electricity bills. In September 2024, the lender flamboyantly blocked another power subsidy scheme. Punjab was offering a discount of Rs. 14 per unit on bills for three months, the lender said no and threatened to halt bailout talks if the subsidy wasn’t canceled. 2024 wasn’t short of several key rejections by the lender overall. Back in February, IMF rejected Pakistan’s rationalization and circular debt reduction measures. The lender later refused to allow the government to exempt things like stationery, baby food, cement, and other items from taxation in the FY25 budget. Then why stay silent on MPA increments? The timing and magnitude of these salary increases could make things worse for Pakistan’s already fragile economic situation. A government that has managed to curb inflation has failed to improve basic expenditure risks and badly alienated the public and ignited further political unrest. The increase in salaries for politicians and high-ranking officials, while trivial in comparison to the scale of Pakistan’s fiscal deficit, could send the wrong signal about the government’s priorities. It does bear mentioning that in October 2024, Pakistan reported a fiscal surplus of Rs. 1.7 trillion, a first in two decades. The overall budget deficit was recorded at Rs. 1,696 billion while the primary balance remained surplus at Rs. 3,002 billion. Moreover, the IMF’s inaction on this issue may undermine the credibility of its stance on fiscal discipline in the region, especially when its focus on controlling off-budget expenditures and addressing revenue shortfalls has been more aggressive in the past. Given the nature of the IMF mandate, its current silence may be indicative of the geopolitical and political complexities that often blow its interventions in Pakistan way out of proportion.