Pakistan eliminates 150,000 jobs, shuts down six ministries as part of IMF agreement
text_fields
Pakistan eliminates 150,000 jobs, shuts down six ministries as part of IMF agreement
In a bid to cut administrative costs and meet conditions set by the International Monetary Fund (IMF), Pakistan announced on Sunday that it will abolish 150,000 government jobs, close six ministries, and merge two others.
These actions come as part of a $7 billion loan agreement finalized with the IMF.
On September 26, the IMF approved the assistance package and released over $1 billion in the first tranche. The agreement requires Pakistan to reduce expenditures, raise its tax-to-GDP ratio, expand taxation to sectors like agriculture and real estate, limit subsidies, and transfer certain fiscal responsibilities to provincial governments.
Minister for Finance Muhammad Aurangzeb, speaking to the media upon his return from the United States, confirmed that this would be Pakistan's final IMF program if economic policies are successfully implemented. He emphasized that in order for Pakistan to advance economically and potentially join the G20, the country must formalize its economy.
Aurangzeb outlined the government's plan to right-size its ministries, noting that six ministries will be shut down and two will be merged. Additionally, 150,000 government positions will be eliminated as part of these cost-cutting measures.
He also discussed efforts to boost tax revenue, reporting an increase in the number of registered taxpayers from 1.6 million to 3.2 million. Aurangzeb said the government plans to abolish the "non-filers" category, making it impossible for those not paying taxes to purchase property or vehicles.
The finance minister expressed optimism about the country's economic trajectory, highlighting improvements in foreign exchange reserves, national exports, and IT exports. He claimed inflation has decreased to single digits and stated that the policy rate had been reduced by 4.5% since the government took office. Aurangzeb believes these developments reflect growing investor confidence in Pakistan’s economic stability.
Despite these reforms, Pakistan's economic challenges remain. The country narrowly avoided default in 2023 with the help of a $3 billion IMF loan. While the government has expressed hope that this will be the last IMF program, some experts remain skeptical given Pakistan's history of relying on repeated loans without achieving lasting economic reform.
