Human Security in Pakistan There are contrasting trends in the components of current expenditure. First, the cost of debt servicing has risen rapidly from 3.9% of the GDP to the likely level of 6.1% of the GDP in 2022-23. Second, the level of defense expenditure, excluding pensions and the cost of civil armed forces, has fallen from 2.3% of the GDP to 1.9% of the GDP. Third, other current expenditures, consisting of expenditures on subsidies, grants, services, pensions, overhead costs, etc., have been the major component of current expenditure. The level has risen modestly from 8.1% of the GDP to 8.4% of the GDP. The area of greatest concern is the sharp drop in the level of development expenditure. It has fallen in a big way from 4% of the GDP to only 1.9% of the GDP likely in 2022- 23. This has greatly restricted the rate of expansion in infrastructure and services and thereby limited the GDP growth rate of the economy. Based on the above findings, the economy and rationalization of expenditure will have to focus on the cost of debt servicing and rationalization of subsidies and grants, along with a reduction in the cost of running both the Federal and the Provincial Governments. Consequently, the proposals for expenditure rationalization are presented in Chart 14.4. Chart 14.4: Proposals for Expenditure Containment FEDERAL GOVERNMENT 1. Privatization of Loss-Making SOEs and reduction in contingent liabilities and subsidies of other SOEs, especially in the power Sector 2.‘Haircut’ of Government Debt with Banks 3. Reduction in Non-Combat Defence Expenditure 4. Reduction in Non-Salary Expenditure of Government 5. Rationalization of the Number of Ministries and Divisions 6.‘Zero Base’ Budgeting of Attached Departments and Autonomous Bodies 7. Extension of the Age of Retirement to 63 years TOTAL PROVINCIAL GOVERNMENTS 1. Reduction in Non-Salary Expenditure 2. Rationalization of the Number of Ministries/Departments 3. Extension of Age of Retirement to 63 years 4.‘Zero Base Budgeting’ of Provincial Agencies TOTAL OVERALL TOTAL Reduction (% of GDP) 0.500 0.250 0.125 0.250 1.250 1.25 0.250 0.250 0.250 1.500 116