In an effort to reduce administrative expenditure, cash-strapped Pakistan on Sunday agreed to eliminate about 150,000 government posts, close six ministries and two as part of reforms agreed under a US$7 billion loan deal with the IMF. Announced the merger of others.
On 26 September the International Monetary Fund finally approved the aid package and released it as the first tranche after Pakistan committed to cut expenditure, increase the tax-to-GDP ratio, raise taxes on non-traditional sectors such as agriculture and real estate. Released over USD 1 billion in. , limit subsidies and transfer some financial responsibilities to the provinces.
Addressing the media on his return from America, Finance Minister Muhammad Aurangzeb said that a program has been finalized with the IMF, which will be the last program for Pakistan.
“We need to implement our policies to prove that this will be the last event,” he said. He stressed that to join the G20, the economy will have to be formalized.
The minister said right-sizing work is underway within the ministries and the decision to close down six ministries will be implemented, while two ministries will be merged. Aurangzeb said, “In addition, 150,000 posts in various ministries will be abolished.”
He discussed in detail the rising tax revenue and said that there were about 300,000 new taxpayers last year and 732,000 new taxpayers have registered so far this year, taking the total number of taxpayers in the country from 1.6 million to 3.2 million.
Aurangzeb also said that the category of tax non-payers would be abolished and those who did not pay taxes would no longer be able to buy property or vehicles.
The minister claimed that the economy is moving in the right direction and the country’s foreign exchange reserves have increased to its highest level. He highlighted the significant growth in both national exports and IT exports and said investor confidence regarding the strength of the economy is a major breakthrough.
Aurangzeb said the policy rate has been cut by 4.5 percent by the government after coming to power, and expressed hope that the exchange rate and the policy rate will remain as expected.
“Our claim that the economy is improving is not an empty claim as inflation has come down due to government policies. Inflation has fallen to single digits,” he said.
Pakistan has been struggling to recover its economy for the past several years and was close to default in 2023 but a timely US$3 billion loan by the IMF saved the situation.
Pakistan has negotiated a long-term loan with the global lender with the expectation and commitment that it will be the last loan. However, many are skeptical of this claim as the country has already received nearly two dozen loans from the fund but has failed to address the economy on a sustainable basis.