Pakistan on Sunday announced that it is taking a series of measures to minimize its administrative expenditures which includes abolishing about 150,000 government posts, closing six ministries, and merging two others, as part of reforms agreed upon with the IMF under the $7 billion loan deal.
The IMF had finally agreed to an assistance package for Pakistan and released over $ 1 billion as the first tranche on September 26, after the nation 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.
Finance minister Muhammad Aurangzeb, addressed media upon return from the US, and said that this would be the last programme for Pakistan that had been finalized with the IMF.
“We need to implement our policies to prove that it will be the last programme,” he said, and emphasized that the economy must be formalized if the country is to join the G20.
The minister said right-sizing within ministries was being implemented and the decision to close six ministries and merging of two is to be implemented. “Additionally, 150,000 posts across various ministries will be eliminated,” Aurangzeb said.
Elaborating on growth in tax revenues, he highlighted that around 300,000 new taxpayers have registered last year, and this year has already seen 732,000 new registrations. This surge has doubled the total number of taxpayers in the country from 1.6 million to 3.2 million.
Aurangzeb also announced that the category of non-filers will be eliminated, which means that individuals who do not pay taxes will no longer be allowed to purchase property or vehicles.
The minister claimed that the economy was headed in the right direction as the country’s foreign exchange reserves had peaked. He pointed out the substantial growth in national exports and IT exports, stating that strong investor confidence in the economy is a significant achievement.
Aurangzeb also stated that after winning, the government has reduced the policy rate by 4.5 per cent and was optimistic that the exchange rate and policy rate would remain constant.
“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 grappling with economic challenges and was on the brink of default in 2023. However, a timely loan of $3 billion from the IMF helped avert the crisis.
Pakistan has negotiated a long-term loan with the global lender, expressing hope and commitment that this will be the final loan. However, many are skeptical, given that the country has already received around two dozen loans from the Fund without achieving lasting economic solutions.