Pakistan cuts 1.5 lakh jobs and dissolves six ministries to secure $7 billion IMF loan

Cash-strapped Pakistan announced that in efforts to reduce administrative expenditures, the country has cut nearly 1.5 lakh government jobs, closed six ministries, and merged two others to secure a $7 billion loan deal from the International Monetary Fund (IMF), reported the news agency PTI on Sunday, September 29.

The IMF on September 26 agreed to the assistance package and also released $1 billion as the first segment after Pakistan pledged to reduce expenditures, increase tax-to-GDP ratio, tax non-traditional sectors like agriculture and real estate, limit subsidies and transfer some fiscal responsibilities to provinces, reported the agency.

Minister of Finance Muhammad Aurangzeb, after his return from the United States, said that a programme had been finalised with the IMF, which would be the last programme for Pakistan, according to the report. 

“We need to implement our policies to prove that it will be the last programme,” said Aurangzeb and highlighted that to join the G20 nations, the country's economy must be formalised, reported the agency.

The minister talked about right-sizing the ministries was 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,” said Aurangzeb as per the agency report.

There were nearly 3 lakh new taxpayers last year, and so far this year, 7.32 lakh new taxpayers have registered, increasing the total number of taxpayers to 3.2 million, compared to 1.6 million, according to the agency report.

The minister also claimed that the economy was moving in the right direction and the country's forex reserves had increased reaching their highest levels. Aurangzeb highlighted the growth in the nation's exports and IT exports, and said that investor confidence related to the strength of the economy is major success, according to the report.

“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, quoted the agency.

Pakistan has been struggling to fix its economy for many years, and it was close to default in 2023, but a timely loan of $3 billion by the IMF saved the situation, as per the report.

Pakistan's deal with the IMF is with hopes that it is the last loan, however many doubt the country had already secured about two dozen loans from the Fund but failed to address the economy on a permanent basis, as per the report.