A 10% to 15% increase in the salaries of government employees is expected in the federal budget for the fiscal year 2024-25.
The federal government is also likely to hike the pensions of retired employees by 10%.
Besides, a proposal to increase the Employees' Old-Age Benefits Institution (EOBI) funds is also under consideration.
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Apart from this, pension reforms are also likely to be introduced to reduce the burden on the national exchequer.
According to sources, the federal government is considering a proposal to increase the salaries of its employees taking into account the International Monetary Fund’s (IMF) conditions and other factors including inflation for the next financial year.
It is also consulting with the provinces for this purpose.
However, the final decision will be made by the governments after reviewing the recommendations of the finance ministry.
If approved, the increase will take effect from July this year.
A federal minister recently said the government was considering increasing its retirement age and restructuring its pension payments to alleviate the financial strain on the economy.
Federal Finance Minister Muhammad Aurangzeb described pension payments as a "big liability".
Speaking on the occasion, Federal Law Minister Azam Nazeer Tarar mentioned plans to retain experienced employees to reduce financial burden, with legislation encompassing various sectors.
He continued that a committee had been formed by Prime Minister Shehbaz Sharif to propose pension reform recommendations.
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The unfunded liability nature of the pensions and the growth in its expenditure is increasingly becoming a challenge for the government as it prepares its budget.
Pakistan budgeted a sum of Rs801 billion for superannuation allowances and pensions for the fiscal year 2023-24 as a current expenditure, up 31% from the amount of Rs609 billion reserved for this purpose for the last FY.
During the government’s talks with the IMF review mission for a new bailout package, the global lender called for further expansion of poverty alleviation and social protection programmes.
According to sources, the IMF emphasised on increasing the coverage of the Benazir Income Support Programme (BISP) as well as ensuring transparency and improving its administrative efficiency.
It added that the budget of cash transfer to the poor programmes should be enhanced as much as possible.
Briefing the IMF mission, the Pakistani officials said Rs472 billion would be spent on the BISP this year.
They added that the BISP beneficiaries would be protected from the electricity tariff in the future through the cash transfer programme.
