Pakistan's Prime Minister Shehbaz Sharif
Credit: Reuters photo
Islamabad: In an effort to minimise administrative expenditures, cash-strapped Pakistan on Sunday announced to abolish about 150,000 government posts, close six ministries, and merge two others, as part of reforms agreed upon with the IMF under USD 7 billion loan deal.
The International Monetary Fund on September 26 finally gave a nod to the assistance package and also released over USD 1 billion as the first tranche after Pakistan committed to cut expenditures, increase tax-to GDP ratio, tax non-traditional sectors like agriculture and real estate, limit subsidies and transfer some fiscal responsibilities to provinces.
Addressing the media on his return from the US, Minister for Finance Muhammad Aurangzeb said that a programme had been finalised with the IMF, which would be the last programme for Pakistan.
“We need to implement our policies to prove that it will be the last programme,” he said, and emphasised that in order to join the G20, the economy must be formalised.
The minister said right-sizing within ministries was going on and the decision to close six ministries is set to be implemented, while two ministries will be merged. “Additionally, 150,000 posts across various ministries will be eliminated,” Aurangzeb said.
He dwelt at length on increasing tax revenues, noting that there were approximately 300,000 new taxpayers last year, and so far this year, 732,000 new taxpayers have registered, increasing the total number of taxpayers in the country from 1.6 million to 3.2 million.
Aurangzeb also said that the non-filers category will be abolished and those not paying taxes will no longer be able to purchase property or vehicles.
The minister claimed that the economy was moving in the right direction and the country’s foreign exchange reserves had increased, reaching their highest level. He highlighted significant growth in both national exports and IT exports, and stated that investor confidence regarding the strength of the economy is a major success.
Aurangzeb stated that the policy rate has been reduced by 4.5 per cent by the government after coming to power, and expressed optimism that the exchange rate and policy rate will remain as expected.
“Our claim that the economy is improving is not a hollow claim because inflation has decreased due to government policies. Inflation has dropped to single digits,” he said.
Pakistan has been struggling to fix its economy for the last many years and it was close to default in 2023 but a timely loan of USD 3 billion by the IMF saved the situation.
Pakistan has negotiated a long-term loan with the global lender with the hope and commitment that it would be the last loan. However, many doubt this claim as the country has already secured about two dozen loans from the Fund but failed to address the economy on a permanent basis.